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Lake Tahoe Mortgage Rate Trends- October 24, 2014

Friday’s bond market has opened in positive territory even though stocks are showing minor gains. The Dow is up 38 points while the Nasdaq has gained 13 points. The bond market is currently up 4/32 (2.26%), but I don’t believe we will see much of a change in this morning’s mortgage rates due to a little weakness late yesterday.

September’s New Home Sales report at 10:00 AM was today’s only relevant economic data. The Commerce Department reported that sales of newly constructed homes rose 0.2% last month. This was a stronger monthly move than the decline that was expected. However, that difference is due to a sizable downward revision in August’s sales that allowed for the small increase from August to September. The number of sales fell short of analysts’ forecasts, making the data slightly positive for the bond and mortgage markets. Unfortunately, this data is not important enough to affect rates with that size of a variance.

If we see an intraday revision to mortgage rates, it will likely be a result of a noticeable move in stocks. If the major stock indexes extend their current gains, bonds could come under pressure, leading to an upward revision to rates later today. On the other hand, stock weakness should favor bonds and possibly cause rates to improve slightly this afternoon.

Next week is very busy with several important economic releases, including the preliminary GDP reading for the 3rd quarter. In addition to the data and a couple of Treasury auctions, there is another FOMC meeting taking place. There is nothing of relevance set for Monday, but we still may see movement in the markets and rates as investors prepare for the week’s activities. Look for details on those events in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- October 23, 2014

Thursday’s bond market has opened in negative territory with stocks rallying and no major economic data to offset that stock influence. The major stock indexes are reacting positively to some corporate earnings news, pushing the Dow higher by 230 points and the Nasdaq higher by 64 points. The bond market is currently down 13/32 (2.26%), which should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

Today’s two economic reports gave us mixed results but hasn’t had much of an impact on this morning’s pricing. The first report came at 8:30 AM ET when last week’s unemployment figures were posted. It showed that 283,000 new claims for unemployment benefits were filed last week, up from the previous week’s revised total of 266,000 initial claims. The increase in claims indicates the employment sector weakened some last week, but the fact that it fell just short of expectations makes the news neutral to slightly positive for the bond and mortgage markets.

September’s Leading Economic Indicators (LEI) was also posted this morning. The Conference Board announced at 10:00 AM ET that September’s LEI rose 0.8%, exceeding forecasts of a 0.5% increase. That is negative news for bonds and mortgage rates because it is predicting stronger than expected economic growth over the next several months.

Tomorrow closes the week with September’s New Home Sales report at 10:00 AM ET. This data covers the small percentage of home sales that Tuesday’s Existing Home Sales report didn’t include. It is expected to show a decline in sales of newly constructed homes, but regardless of its results I am not expecting it to have a significant impact on tomorrow’s mortgage rates.

Lake Tahoe Mortgage Rate Trends- October 22, 2014

Wednesday’s bond market has opened flat as stocks have done also. The Dow and Nasdaq are both up a couple points from yesterday’s close while the bond market is nearly unchanged also at 2.22%. This should keep this morning’s mortgage rates at yesterday’s levels.

This morning’s only economic data was September’s Consumer Price Index (CPI) at 8:30 AM ET. It gave us mixed results but no big surprises. The overall reading rose 0.1% when it was expected to be unchanged and the core reading that excludes more volatile food and energy costs rose 0.1%, falling just short of the 0.2% forecast. The increase in the overall reading was a bit negative for bonds but the weaker core reading offsets that. Both readings indicate inflationary pressures at the consumer level of the economy remain subdued. That is generally good news for the bond market and mortgage rates. However, since both were close to expectations, we have seen little impact on this morning’s trading.

Tomorrow has two pieces of data but neither are considered to be highly important. The first will be last week’s unemployment figures at 8:30 AM ET. They are expected to show that 285,000 new claims for unemployment benefits were filed last week, up noticeably from the previous week’s 264,000 initial claims. The higher the number of new claims, the better the news it is for mortgage rates because rising claims hints at a softening employment sector. It is worth noting though that because this is only a weekly report, it usually takes a surprisingly weak or strong number for the data to affect mortgage rates.

September’s Leading Economic Indicators (LEI) will be released by the Conference Board at 10:00 AM ET tomorrow morning. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.5% from August’s reading. This would indicate that economic activity is likely to increase over the next couple of months. That would be relatively bad news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a decline though.

Lake Tahoe Mortgage Rate Trends- October 21, 2014

Tuesday’s bond market has opened in negative territory due to early stock strength and stronger than expected housing news. The stock markets are showing noticeable gains with the Dow up 80 points and the Nasdaq up 62 points. The bond market is currently down 7/32 (2.21%), which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

Today’s only relevant economic data came from the National Association of Realtors late this morning. They released their Existing Home Sales report for September that showed a 2.4% increase in home resales last month, exceeding forecasts. That increase pushed sales to their best levels in a year, indicating housing sector strength.

Stocks are reacting favorably to some overnight earnings news, particularly earnings from Apple that beat analysts’ expectations. I suspect any move in bonds or an intraday change in mortgage rates will be a result of stocks either extending their current gains or giving them up. If the major stock indexes remain near current levels, mortgage rates should follow suit today.

Tomorrow brings us the release of a key inflation reading that is important to the bond market. September’s Consumer Price Index (CPI) will be posted at 8:30 AM ET tomorrow, giving us a measurement of inflationary pressures at the very important consumer level of the economy. Analysts are expecting to see no change in the overall index and an increase of 0.2% in the core data. A larger than expected increase in the core reading could raise inflation concerns, pushing bond prices lower and mortgage rates higher tomorrow morning. Inflation is the number one nemesis of the bond market because it erodes the value of a bond’s future fixed interest payments. When inflation is a threat, even down the road, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers.

Lake Tahoe Mortgage Rate Trends- October 20, 2014

Monday’s bond market has opened in positive territory following a mixed open in stocks. The Dow is starting the week with a 65 point loss while the Nasdaq is up 17 points. The bond market is currently up 8/32 (2.17%), which should improve this morning’s mortgage rates by approximately .125 of a discount point over Friday’s morning pricing.

There is nothing of relevance being posted this morning, leaving bonds to trade with stocks. Bonds have started the week favorably for mortgage shoppers, but as we saw last week they can change direction very quickly so keep an eye on the markets. The rest of the week brings us the release of four pieces of economic data that are likely to affect mortgage rates. Only one is considered to be very important and even it fails to move the markets or mortgage pricing many months.

The National Association of Realtors will start the week’s activities with the release September’s Existing Home Sales data at 10:00 AM ET tomorrow morning. This report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales. I don’t see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts’ forecasts could lead to a slight change in mortgage pricing. It is expected to show an increase in sales from August to September, meaning the housing sector strengthened. That would be bad news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors.

Overall, Wednesday has the most important report but unless it shows some significantly strong or weak results, it should only have a minor impact on this week’s rates. Tomorrow is the only day with nothing scheduled, so by default we can label it the best candidate for calmest day. However, if we see last week’s volatility carry into this week’s trading, all bets are off as any day could be extremely active for bonds and mortgage pricing. After what we saw last week, it would be extremely prudent to maintain contact with your mortgage professional if still floating an interest rate.

Lake Tahoe Mortgage Rate Trends- October 19, 2014

This week brings us the release of four pieces of economic data that are likely to affect mortgage rates. Only one is considered to be very important and even it fails to move the markets or mortgage pricing many months. But was we saw multiple days last week, we don’t necessarily need to have key data being posted to have havoc in the markets.

The National Association of Realtors will start the week’s activities with the release September’s Existing Home Sales data late Tuesday morning. This report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales. I don’t see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts’ forecasts could lead to a slight change in mortgage pricing. It is expected to show an increase in sales from August to September, meaning the housing sector strengthened. That would be bad news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors.

September’s Consumer Price Index (CPI) will be posted Wednesday at 8:30 AM ET. It measures inflationary pressures at the very important consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see no change in the overall index and an increase of 0.2% in the core data. A larger than expected increase in the core reading could raise inflation concerns, pushing bond prices lower and mortgage rates higher. Inflation is the number one nemesis of the bond market because it erodes the value of a bond’s future fixed interest payments. When inflation is a threat, even down the road, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers.

Thursday also has a single monthly report scheduled that is worth watching. September’s Leading Economic Indicators (LEI) will be released by the Conference Board at 10:00 AM ET Thursday morning. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.6% from August’s reading. This would indicate that economic activity is likely to increase over the next couple of months. That would be relatively bad news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a decline though.

The final report of the week is September’s New Home Sales at 10:00 AM ET Friday. This data covers the small percentage of home sales that Tuesday’s Existing Home Sales report didn’t include. It is expected to show a decline in sales of newly constructed homes, but regardless of its results I am not expecting it to have a significant impact on mortgage rates Friday.

Overall, Wednesday has the most important report but unless it shows some significantly strong or weak results, it should only have a minor impact on this week’s rates. Tomorrow is the only day with nothing scheduled, so by default we can label it the best candidate for calmest day. However, if we see last week’s volatility carry into this week’s trading, all bets are off as any day could be extremely active for bonds and mortgage pricing. After what we saw last week, it would be extremely prudent to maintain contact with your mortgage professional if still floating an interest rate.

Lake Tahoe Mortgage Rate Trends- October 16, 2014

Friday’s bond market has opened in negative territory with stocks posting significant gains during early trading. The Dow is currently up 266 points while the Nasdaq has gained 69 points. The bond market is currently down 21/32 (2.22%), which with weakness late yesterday should push this morning’s mortgage rates higher by approximately .250 – .375 of a discount point if comparing to Thursday’s morning pricing.

This morning’s economic data didn’t do much to help support bonds with both reports showing stronger economic conditions. The first was September’s Housing Starts at 8:30 AM ET from the Commerce Department that showed a 6.3% increase in construction starts of new homes. This was just slightly stronger than expected, but indicates growth in the housing sector. Therefore, we can consider the data neutral to slightly negative for mortgage rates.

The University of Michigan’s Index of Consumer Sentiment for October was released late this morning. It came in at 86.4, exceeding forecasts of 84.0 and up from September’s 84.6. This means more surveyed consumers felt better about their financial and employment situations than did last month. Because rising confidence usually translates into higher levels of consumer spending, the news is negative for the bond and mortgage markets.

Next week has a small handful of economic reports scheduled that have the potential to influence mortgage rates. There is one key inflation reading, but besides it there isn’t too much to be concerned about. However, that does not mean we are protected from market volatility and swings in mortgage pricing. There is nothing of importance set for Monday, but look for details on next week’s calendar in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- October 16, 2014

Thursday’s bond market has opened in positive territory again as the rollercoaster ride in the markets continue. Stocks are still in selling mode with the Dow down 168 points and the Nasdaq down 60 points. The bond market is currently up 14/32 (2.08%), but due to a significant pullback late yesterday afternoon you likely will not see an improvement in this morning’s rates.

The markets were extremely volatile yesterday with both stocks and bonds in huge swings between highs and lows of the day. More troubling to mortgage borrowers was a rapid and sizable drop in bond prices (pushing yields upward) right before trading closed. Most lenders issued multiple intra-day rate revisions yesterday with improvements during morning trading and increases during afternoon hours being the majority. During most sessions we can track rate changes by moves in the markets and some lenders that are more active and quicker to react than others. But yesterday was simply chaos with the number and frequency of the changes that were issued. Overall, I believe we should see this morning’s rates be approximately .250 – .375 of a discount point higher than yesterday’s morning pricing. However, that may not be the case for all lenders because many made significant and preemptive moves to allow for overnight changes.

It is worth noting what is causing this craziness in the markets. Primarily, concerns about the global economy, fueled by weaker economic data from overseas, are causing stocks to sell. Contributing to that momentum was weaker economic data here (Retail Sales), Ebola concerns and softer corporate earnings that are driving stocks lower, creating a safe haven move to bonds. However, that flight to safety unwound late yesterday even though stocks remained weak, which is a major concern in my opinion and cause to proceed extremely cautiously if still floating an interest rate.

This morning had two pieces of economic data for the markets to digest, but both went relatively unnoticed. The first was last week’s unemployment figures at 8:30 AM ET that showed only 264,000 new claims for unemployment benefits were filed last week. This was much lower than the 290,000 that was expected and a sizable drop from the previous week’s 287,000 initial claims. That indicates a strengthening employment sector, making the data negative for bonds and mortgage rates.

September’s Industrial Production data was posted at 9:15 AM ET. It revealed a 1.0% increase in output at U.S. factories, mines and utilities. Analysts were calling for only a 0.4% increase, meaning manufacturing activity was stronger than many had thought. That also makes the data stock friendly and bad for bonds.

Tomorrow has two more reports that may affect mortgage rates, although neither is considered highly important. I suspect stocks will heavily influence bond trading and mortgage pricing yet again. September’s Housing Starts will be released at 8:30 AM ET, but probably will not have significant 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 an increase in new home starts between August and September. I believe we need to see a significant surprise in this data for it to have an impact on tomorrow’s mortgage rates.

The last release of the week will be posted by the University of Michigan just before 10:00 AM ET tomorrow. Their Index of Consumer Sentiment for October will give us an indication of consumer confidence, which helps us measure consumers’ willingness to spend. If consumer confidence in their own financial situations is rising, they are more apt to make large purchases. But, if they are growing more concerned about their job security or finances, they probably will delay making that large purchase. This influences future consumer spending data and can impact the financial markets. It is expected to show a reading of 84.0, which would mean confidence slipped from September’s level of 84.6. That would be considered favorable news for bonds and mortgage rates because waning consumer spending translates into slower economic growth.

Lake Tahoe Mortgage Rate Trends- October 15, 2014

Wednesday’s bond market is in rally mode following several favorable events including a significant sell off in stocks. The major stock indexes are posting sizable losses during early trading with the Dow currently down 202 points and the Nasdaq down 41 points. The bond market is currently up 39/32, pushing the 10-year yield down to 2.05%. It has been an extremely active first couple hours of trading with large swings in both bonds and stocks, so we can only guess as to what this will do to this morning’s mortgage rates. Much depends on what time your lender posted rates, but the net result should be somewhere between .500 and .750 of a discount point lower than yesterday’s morning pricing.

September’s Retail Sales report was one of the two important reports that were posted at 8:30 AM ET this morning. The Commerce Department release showed that retail-level sales fell 0.3% last month, falling short of the 0.2% decline that was expected. A secondary reading that excludes more volatile auto sales fell 0.2% when it was expected to rise 0.3%. That is a sizable variance and indicates that consumer spending was weaker than many had thought. Since consumer spending makes up over two-thirds of our economy, the data raised more concern about overall economic growth. Because bonds tend to thrive in weaker economic conditions, this was extremely favorable to the bond market and mortgage rates.

The second report of the morning was September’s Producer Price Index (PPI) that revealed a 0.1% decline in the overall reading and no change in the more important core data that excludes volatile food and energy prices. Both readings were below forecasts, indicating inflationary pressures at the producer level of the economy not only remained subdued, but were softer than analysts were expecting to see. That makes the data favorable for bonds and mortgage rates also.

The third and final relevant report of the day will come at 2:00 PM ET when the Federal Reserve posts their Beige Book. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may extend this morning’s gains and mortgage rates could drop more. If it reveals signs of inflation growing or solid economic activity in many regions, we could see mortgage rates revise higher later today.

Tomorrow has two pieces of economic data being released, but neither are anywhere close to being as important as this morning’s reports were. The first is last week’s unemployment figures at 8:30 AM ET. They are expected to show that 290,000 new claims for unemployment benefits were filed last week. This would be a small increase from the previous week’s 287,000 initial filings. The larger the number of new claims, the better the news it is for bonds and mortgage rates.

The second report of the morning will be September’s Industrial Production data at 9:15 AM ET. This release gives us an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.4% increase in output from August’s level, meaning that manufacturing activity rose. A larger than expected increase in production would be negative for bonds and mortgage rates as it would indicate economic strength. A decline in output would be favorable for mortgage shoppers.

Lake Tahoe Mortgage Rate Trends- October 14, 2014

10:32AM ET: Tuesday’s bond market has opened well in positive territory following more stock selling yesterday. The major stock indexes are in positive territory during early trading, but have recovered only a small portion of yesterday’s 223 point loss in the Dow and 62 points in the Nasdaq. The Dow is currently up 42 points while the Nasdaq has gained 13 points. The bond market is currently up 18/32 (2.22%), which should improve this morning’s mortgage rates by approximately .250 of a discount point if comparing to Friday’s morning pricing. The bond market was closed yesterday for the Columbus Day holiday, but the stock markets were open for business.

There is no relevant economic data set for release today. This morning’s bond strength is mostly due to yesterday’s stock selling and some economic news from overseas that indicated slower economic growth. There is no doubt that bonds have rallied and mortgage rates have moved noticeably lower over the past week or so. However, I am not comfortable shifting to a less conservative stance towards rates just on this move alone. We are due for some profit-taking and possibly a sizable upward move in my opinion. If I was closing on a loan in the near future, I would seriously consider locking at these low rates before that move comes. There may or may not be a little more improvement, but the risk of a sizable upward spike in rates outweighs the potential gain of continuing to float much longer in my opinion.

We have three reports scheduled for tomorrow, all of which are considered highly relevant to bonds and mortgage pricing. September’s Retail Sales report is the first at 8:30 AM ET tomorrow morning. It measures consumer level sales and is very important to the markets because consumer spending makes up over two-thirds of the U.S. economy. If consumer level spending is strong, overall economic growth is likely to be stronger, making bonds less attractive to investors. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop again tomorrow. Current forecasts are calling for a 0.2% decline in sales. Good news for the bond market and mortgage pricing would be a larger decline.

Also set for release at 8:30 AM ET tomorrow is September’s Producer Price Index (PPI). This index measures inflationary pressures at the manufacturing level of the economy and is also considered to be highly important to the bond market. Analysts are expecting to see a rise of 0.1% in the overall index and an increase of 0.1% in the more important core data reading. A larger than expected increase in the core reading could raise inflation concerns, pushing bond prices lower and mortgage rates higher. Inflation is the number one nemesis of the bond market because it erodes the value of a bond’s future fixed interest payments. When inflation is a threat, even down the road, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers.

The third and final relevant report of the day is the Federal Reserve’s Beige Book, which is named simply after the color of its cover. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we could see mortgage rates revise higher tomorrow afternoon.

Overall, it appears tomorrow is an easy label for the most important day of the week although today’s unexpected bond rally makes today a worthy opponent also. In addition to the economic data this week, there are many companies posting earning reports, including some big names such as Citigroup, GE and Intel. If the corporate earnings releases are generally weaker than forecasts, stocks may suffer, making bonds more appealing to investors. The end result would likely be an improvement in rates. The flip side though is stronger than expected earnings that drive stocks higher, pushing bond prices lower and mortgage rates upward. Accordingly, please maintain contact with your mortgage professional if still floating an interest rate.