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Lake Tahoe Mortgage Rate Trends- September 23, 2014

Tuesday’s bond market has opened in positive territory with stocks showing early losses again and no economic data to drive trading. The major stock indexes are showing minor losses with the Dow down 31 points and the Nasdaq down 4 points. The bond market is currently up 5/32 (2.55%), which should improve this morning’s mortgage rates slightly if comparing to yesterday’s morning pricing.

There is nothing of relevance scheduled for today that is expected have an impact on mortgage rates. If we see an intra-day revision to rates, it will likely be a result of a noticeable move in stocks. If the major stock indexes move into positive ground, we could see bond prices fall and mortgage rates move higher later today. On the other hand, if they extend their current losses, we could see an improvement to mortgage rates follow.

August’s New Home Sales will be released late tomorrow morning. The Commerce Department is expected to say that sales of newly constructed homes rose last month, indicating strength in the new home portion of the housing sector also. This report will likely not have a noticeable impact on mortgage rates unless its readings differ greatly from forecasts. It is the week’s least important report in terms of potential impact on mortgage rates, partly because it covers only the small portion of all homes sales that yesterday’s Existing Home Sales report did not.

Also tomorrow is the first of this week’s two Treasury auctions that have the potential to affect rates. The Treasury will sell 5-year Notes tomorrow and 7-year Notes Thursday. They will tell us if there is an appetite in the markets for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction will come during early afternoon trading tomorrow.

Lake Tahoe Mortgage Rate Trends-September 22, 2014

Monday’s bond market has opened in positive territory with stocks starting the week in negative ground and today’s only economic data showing favorable results. The major stock indexes are showing moderate losses with the Dow down 64 points and the Nasdaq down 53 points. The bond market is currently up 4/32 (2.56%), which with strength late Friday should improve this morning’s mortgage rates by approximately .250 of a discount point over Friday’s morning pricing.

Unlike many Mondays, we did have some economic data to digest this morning. The National Association of Realtors posted August’s Existing Home Sales report at 10:00 AM ET today. It showed a 1.8% decline in home resales last month, falling a little short of expectations. This means that the housing sector was a bit softer than many had thought, making the data slightly favorable for the bond and mortgage markets.

The rest of the week brings us the release of four more relevant economic reports for the bond market to digest in addition to two potentially influential Treasury auctions, none of which are scheduled for tomorrow. Most of the reports are considered to be of moderate to fairly high importance to the markets, so they do have the potential to affect mortgage rates although I am expecting to see less volatility in the financial and mortgage markets than we saw last week.

Overall, I don’t see an obvious choice for key day of the week but Thursday has the single most important data of the five. Friday has two reports scheduled so it deserves some consideration also. The least important day looks to be tomorrow with nothing of relevance scheduled. I suspect we will see changes in mortgage rates multiple days this week, but in small increments rather than sizable moves.

Lake Tahoe Mortgage Rate Trends-September 21, 2014

This week brings us the release of five relevant economic reports for the bond market to digest in addition to two potentially influential Treasury auctions. Most of the reports are considered to be of moderate to fairly high importance to the markets, so they do have the potential to affect mortgage rates although I am expecting to see less volatility in the financial and mortgage markets than we saw last week.

The first report of the week is August’s Existing Home Sales from the National Association of Realtors late tomorrow morning. This report will give us an indication of housing sector strength by tracking home resales in the U.S. It is expected to show a small increase from July’s sales, indicating the housing sector improved slightly last month. However, this data probably will be neutral towards mortgage pricing unless its results vary greatly from forecasts.

August’s New Home Sales will be released late Wednesday morning. The Commerce Department is expected to say that sales of newly constructed homes rose last month, indicating strength in the new home portion of the housing sector also. This report will likely not have a noticeable impact on mortgage rates unless its readings differ greatly from forecasts. This is the week’s least important report in terms of potential impact on mortgage rates, partly because it covers only the small portion of all homes sales that Monday’s Existing Home Sales report does not.

The Treasury will sell 5-year Notes Wednesday and 7-year Notes Thursday. They will tell us if there is an appetite in the markets for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday.

Thursday’s only monthly data is August’s Durable Goods Orders, which is the week’s most important report. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Big-ticket products are items that are expected to last three or more years such as electronics and appliances. Analysts are expecting to see a large decline in new orders, indicating weakness in the manufacturing sector. A larger decline than the 16% that is being forecasted should help boost bond prices and cause mortgage rates to drop Thursday because signs of economic weakness make longer-term securities more appealing to investors. However, a much smaller decline or an increase in new orders would indicate a stronger than expected manufacturing sector that would likely help push mortgage rates higher. It is worth noting that this data is known to be quite volatile from month-to-month, so a slight or moderate variance may not affect mortgage pricing.

Friday morning has the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don’t see this revision having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced within the U.S. and is considered the best measurement of economic activity. It is expected to show that the economy grew at an annual rate of 4.6%. This would be a stronger pace than the previous estimate of 4.2%, making the data negative for bonds and mortgage rates. The lower the number, the better the news it is for mortgage rates.

The second report of the day is the University of Michigan’s revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed an 84.6 reading. Analysts are expecting to see a small upward revision, meaning consumer confidence was slightly stronger than previously thought. Waning confidence is good news for bonds because consumers that are concerned about their own financial and employment situations are less likely to make a large purchase in the near future, limiting economic growth. Therefore, a lower than expected reading would be favorable news for bonds and should help improve mortgage rates.

Overall, I don’t see an obvious choice for key day of the week but Thursday has the single most important data of the five. So, let’s label it as likely to be most active although Friday does have two reports scheduled also. The least important day looks to be Tuesday with nothing of relevance scheduled. I suspect we will see changes in mortgage rates multiple days this week, but in small increments rather than sizable moves.

Lake Tahoe Mortgage Rate Trends- September 19, 2014

Friday’s bond market has opened flat due to early stock gains and a lack of important economic data to offset them. The major stock indexes appear to be closing the week with an upward move. The Dow is currently up 61 points while the Nasdaq is up 8 points. The bond market is currently nearly unchanged from yesterday’s close at 2.61%, which should keep this morning’s mortgage rates at yesterday’s levels.

August’s Leading Economic Indicators (LEI) was posted at 10:00 AM ET this morning. The Conference Board said their LEI rose 0.2% last month, meaning they are predicting minor economic growth over the next several months. This was weaker than the 0.4% that was predicted, so we can consider the data good news for bonds and mortgage rates. Unfortunately, this report is not considered to be important to the markets. Therefore, we are not seeing much of a reaction to the news.

With the benchmark 10-year Treasury yield at 2.61%, I would not be surprised to see a slow small downward move as the recent volatility stabilizes. Since mortgage rates tend to follow bond yields, it could be good news for mortgage shoppers. I don’t necessarily believe that rates are due for a sizable downward move, just that the likelihood of them going much higher in the immediate future as subsided. Accordingly, I am taking a slightly less cautious approach towards locking a rate for longer-term periods. However, that can change at any time so please keep an eye on the markets if still floating an interest rate.

Next week doesn’t bring any key economic reports but we do have relevant data being posted four of the five days. In addition to the handful of reports, there are also a couple of Treasury auctions that have the potential to influence to rates. Monday does have one of those reports with the release of August’s Existing Home Sales data that will give us a measurement of housing sector strength. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

 

 

Lake Tahoe Mortgage Rate Trends- September 18, 2014

Thursday’s bond market has opened in negative territory, extending yesterday afternoon’s weakness. The stock markets are continuing their upward move with the Dow up 79 points and the Nasdaq up 22 points. The bond market is currently down 3/32 (2.63%), which should add another .125 of a discount point increase to yesterday’s upward revision in mortgage rates. All said, we should be seeing an increase of approximately .250 of a discount point from Wednesday’s morning pricing.

Today’s moderately important economic data gave us mixed results. The first report showed that 280,000 new claims for unemployment benefits were filed last week. This was a sizable drop from the previous week’s revised total of 316,000 new claims and well below forecasts of 305,000, indicating that the employment sector was stronger last week than many had thought. That makes the data bad news for bonds and mortgage rates, although the impact on this morning’s mortgage pricing has been fairly minimal because this is only a weekly release.

August’s Housing Starts was also released at 8:30 AM ET this morning, revealing a 14.4% decline in construction starts of new housing. That was a much larger drop than forecasts were calling for, meaning the new home portion of the housing sector weakened noticeably last month. It is worth noting that this number follows a sizable spike in July, so the large decline isn’t as surprising as it may seem. Still, it is favorable news for the bond and mortgage markets but doesn’t carry enough importance to fuel a bond rally.

Tomorrow will close out the week’s schedule with August’s Leading Economic Indicators (LEI) from the Conference Board at 10:00 AM ET. This moderately important index attempts to measure economic activity over the next three to six months. It is expected to show a 0.4% increase, meaning that it is predicting growth in economic activity over the next several months. A larger increase would be considered negative news for bonds and could lead to a minor increase in mortgage rates Friday.

Lake Tahoe Mortgage Rate Trends- September 17, 2014

This week’s FOMC meeting has adjourned with no change to key short-term interest rates, as expected. The language in the post-meeting statement indicated that the Fed is likely to leave key rates at their current levels well after the current bond buying program ends, which is expected to terminate at the October FOMC meeting. That helps keep expectations for a rate hike to come later in 2015 than earlier.

Today’s Fed schedule also brought revised economic projections that showed a downward revision to overall economic growth for this year and next year. Other benchmarks were also revised but most glaring was the GDP figure that is our key measurement of economic activity. The Fed also detailed an exit plan for their balance sheet, specifically that there currently isn’t a set plan to sell mortgage-related bonds. Many feared that when the Fed starts selling their holdings, the supply hitting the market would drive mortgage rates higher. So we can consider this bit of clearly favorable news for future mortgage shoppers.

Overall, the stock and bond markets changed directions multiple times after the meeting adjourned. The stock markets fell into negative ground but the Dow and Nasdaq both closed in positive territory and very close to their pre-adjournment levels. The bond market didn’t fare so well. We saw a decent amount of volatility in trading before closing in negative territory at 2.60%. Along the way, several lenders revised pricing higher by approximately .125 of a discount point from this morning’s rates.

August’s Consumer Price Index (CPI) was today’s only relevant economic data. It was posted at 8:30 AM ET, revealing a 0.2% decline in the overall reading and no change in the more important core data. Both readings were weaker than forecasts, indicating consumer-level inflation remained subdued and softer than analysts thought. That is good news for bonds because rising inflation makes longer term securities less appealing to investors.

Tomorrow has two minor pieces of economic data, both at 8:30 AM ET. The first is last week’s unemployment numbers. They are expected to show that 305,000 new claims for unemployment benefits were filed last week, down from 315,000 of the previous week. Rising initial claims indicates employment sector weakness, so the higher the number of initial claims the better the news it is for bonds and mortgage rates.

Also tomorrow is the release of August’s Housing Starts at 8:30 AM ET. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a noticeable decline in new home starts between July and August. I believe we need to see a significant surprise in this data for it to have a noticeable impact on tomorrow’s mortgage rates.

Lake Tahoe Mortgage Rate Trends- September 17, 2014

Wednesday’s bond market has opened in positive territory following weaker than expected economic data. The stock markets are calm as it seems everyone is waiting for this afternoon’s events to take place before making a move. The Dow is currently up 16 points while the Nasdaq is up 5 points. The bond market is currently up 5/32 (2.57%), but we will likely see an increase in this morning’s mortgage rates of approximately .125 of a discount point due to weakness late yesterday.

August’s Consumer Price Index (CPI) was today’s only relevant economic data. It was posted at 8:30 AM ET, revealing a 0.2% decline in the overall reading and no change in the more important core data. Both readings were weaker than forecasts, indicating consumer-level inflation remained subdued and softer than analysts thought. That is good news for bonds because rising inflation makes longer term securities less appealing to investors.

We have plenty more taking place today that is relevant to mortgage rates. There are technically three Fed events, all less than an hour apart, that are likely to heavily influence the financial and mortgage markets. They start with the 2:00 PM ET adjournment of the FOMC meeting that began yesterday. It is widely expected that Fed Chair Janet Yellen and friends will not change key short-term interest rates at this meeting, but there is plenty of interest in the markets regarding when they will take the first step towards raising rates. The post-meeting statement will be released at the adjournment. Market traders will be looking for any changes to their previous statement.

This FOMC meeting is one that will be followed by updated economic predictions and a press conference with Chair Yellen. Traders will be looking for any revisions to the Fed’s outlook on unemployment, GDP growth, inflation and their timetable for keeping key interest rates at current levels. The economic forecasts will also be released at 2:00 PM ET while the press conference will start at 2:30 PM. All this will most likely lead to afternoon volatility in the markets and mortgage rates.

Look for an update to this report shortly after the markets have had an opportunity to react to the Fed events. There is some minor economic data scheduled for release tomorrow, but they will be addressed in this afternoon’s update.

Lake Tahoe Mortgage Rate Trends- September 16, 2014

Tuesday’s bond market has opened up slightly following slightly favorable inflation news and a flat open in stocks. The Dow is currently up 5 points while the Nasdaq has gained 4 points. The bond market is currently up 3/32 (2.58%), which could push this morning’s mortgage rates slightly lower than yesterday’s early pricing.

The Labor Department posted August’s Producer Price Index (PPI) at 8:30 AM ET this morning, revealing no changes in either the overall or core data readings. The overall reading pegged forecasts but the core reading was expected to rise slightly. This means inflationary pressures at the producer level of the economy were flat last month, making the data good news for the bond and mortgage markets.

Tomorrow is the key day of the week, not only for mortgage rates but also for the broader financial markets. It will start with the release of August’s Consumer Price Index (CPI) at 8:30 AM ET, which is one of the more important monthly reports for the bond market. It is considered to be a key indicator of inflation at the consumer level of the economy. As with today’s PPI, there are two readings in the report- the overall index and the core data reading. Current forecasts show no change in the overall reading and a 0.2% rise in the more important core reading that excludes volatile food and energy prices. The weaker the readings, the better the news it is for bonds and mortgage rates.

We also have several Fed events tomorrow afternoon that are expected to heavily influence the financial and mortgage markets. They start with the 2:00 PM ET adjournment of the FOMC meeting that began today. It is widely expected that Janet Yellen and company will not change key short-term interest rates at this meeting, but there is plenty of interest in the markets regarding when they will take the first step towards raising rates. Also worth noting is that this FOMC meeting is one that will be followed by updated economic predictions and a press conference with Fed Chair Yellen. Traders will be looking for any revisions to the Fed’s outlook on unemployment, GDP growth, inflation and their timetable for keeping key interest rates at current levels. The meeting will adjourn and the economic forecasts will be released at 2:00 PM ET while the press conference will start at 2:30 PM. All this will most likely lead to afternoon volatility in the markets and mortgage rates tomorrow.

Lake Tahoe Mortgage Rate Trends-September 15, 2014

Monday’s bond market has opened in positive territory following weaker than expected economic news and a relatively uneventful opening in stocks. The major stock indexes are starting the week mixed with the Dow up 12 points and the Nasdaq down 34 points. The bond market is currently up 6/32 (2.58%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

Today’s only relevant economic data was August’s Industrial Production report at 9:15 AM ET. It revealed a 0.1% decline in output at U.S. factories, mines and utilities. Analysts were expecting to see a 0.3% increase, indicating that the manufacturing sector was a little weaker than many had thought last month. That makes the data good news for bonds and mortgage rates.

The rest of the week brings us the release of four more relevant economic reports and an afternoon of FOMC events. A couple of items on this week’s calendar are considered to be highly important to the financial and mortgage markets, including tomorrow’s Producer Price Index (PPI). The Labor Department will post August’s PPI at 8:30 AM ET tomorrow, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting no change in the overall index and a rise of 0.1% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of! a bond’s future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices, rising yields and higher mortgage rates.

Overall, there is little doubt that this is going to be an active week for the financial and mortgage markets. Wednesday is the key day due to the FOMC schedule. Tomorrow and Wednesday morning’s data is very important to bonds and Wednesday’s afternoon trading could carry into Thursday morning also. In other words, expect to see the most movement in mortgage pricing the middle days of the week.

Lake Tahoe Mortgage Rate Trends- September 15, 2014

This week brings us the release of five relevant economic reports that may influence mortgage rates in addition to an afternoon of FOMC events. A couple of items on this week’s calendar are considered to be highly important to the financial and mortgage markets, meaning there is a high probability of seeing significant changes to rates this week. This is especially true the middle days of the week.

August’s Industrial Production data will be posted at 9:15 AM ET tomorrow. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important but could help change mortgage rates if there is a significant difference between forecasts and the actual reading. Analysts are expecting to see a 0.3% increase from July’s level of output. A sizable increase could lead to slightly higher mortgage rates, while a weaker than expected figure would indicate a softer than thought manufacturing sector and would be considered good news for bonds and mortgage rates.

The Labor Department will post August’s Producer Price Index (PPI) early Tuesday, an important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting no change in the overall index and a rise of 0.1% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond’s future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices, rising yields and higher mortgage rates.

The PPI will be followed by the Consumer Price Index (CPI) early Wednesday morning, which is one of the more important monthly reports for the bond market. It is considered to be a key indicator of inflation at the consumer level of the economy. As with the PPI, there are two readings in the report- the overall index and the core data reading. Current forecasts show no change in the overall reading and a 0.2% rise in the more important core reading. The weaker the readings, the better the news it is for bonds and mortgage rates.

Wednesday’s Fed events start with the 2:00 PM ET adjournment of the FOMC meeting that begins Tuesday. It is widely expected that Janet Yellen and company will not change key short-term interest rates at this meeting, but there is plenty of interest in the markets regarding when they will take the first step towards raising rates. Also worth noting is that this FOMC meeting is one that will be followed by updated economic predictions and a press conference with Fed Chair Yellen. Traders will be looking for any revisions to the Fed’s outlook on unemployment, GDP growth, inflation and their timetable for keeping key interest rates at current levels. The meeting will adjourn and the economic forecasts will be released at 2:00 PM ET while the press conference will start at 2:30 PM. All this will most likely lead to afternoon volatility in the markets and mortgage rates Wednesday.

Thursday’s only monthly data is August’s Housing Starts at 8:30 AM ET. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a decline in new home starts between July and August. I believe we need to see a significant surprise in this data for it to have a noticeable impact on Thursday’s mortgage rates.

The final report of the week will come from the Conference Board who will post their Leading Economic Indicators (LEI) for August late Friday morning. The moderately important LEI index attempts to measure economic activity over the next three to six months. It is expected to show a 0.4% increase, meaning that it is predicting growth in economic activity over the next several months. A larger increase would be considered negative news for bonds and could lead to a minor increase in mortgage rates Friday.

Overall, there is little doubt that this is going to be an active week for the financial and mortgage markets. Wednesday is the key day due to the FOMC schedule. Tomorrow isn’t too concerning, but Tuesday and Wednesday morning’s data is very important to bonds and Wednesday’s afternoon trading could carry into Thursday morning also. In other words, expect to see the most movement in mortgage pricing the middle days of the week. I would not be surprised to see a significant move in bond prices and mortgage rates this week.