Lake Tahoe Home Loan Rates and Lake Tahoe Mortgage Rates:
Wednesday’s bond market has opened in positive territory following weaker than expected economic data and calming words by Fed Chairman Bernanke. The stock markets are showing early strength also with the Dow up 34 points and the Nasdaq up 12 points. The bond market is currently up 18/32, which should improve this morning’s mortgage rates by approximately .375 of a discount from yesterday’s morning pricing. A portion of that improvement is a result of bond strength late yesterday, but most of it is due to a favorable response to Chairman Bernanke’s prepared statement that was released before his appearance today.
This morning’s only economic data came at 8:30 AM ET when the Commerce Department posted June’s Housing Starts report. It revealed that new construction starts of new housing fell almost 10% last month when analysts were expecting to see an increase. It also dropped new starts to their lowest level in nearly a year, indicating housing sector weakness. That makes the data good news for the bond market and mortgage rates.
Fed Chairman Bernanke started part one of his two-day semi-annual update about the status of our economy and Fed monetary policy before Congress at 10:00 AM ET. He is speaking before the House Financial Services Committee today and the Senate Banking Committee tomorrow. His opening testimony was released to the media earlier this morning, causing a positive reaction in bonds and a neutral reaction in stocks.
His prepared statement more or less clarified the Fed’s stance on the hot topic of tapering of their current bond buying program (QE3). The key was the indication that there is no set plan on place yet. They estimate to start slowing the bond purchases later this year and end it mid-next year, however, that is based on continued economic growth at current or a better pace the next couple months. He reiterated that those estimates can be revised if economic growth, unemployment or inflation changes from their current estimates. That seemed to ease concerns in the bond market that the Fed was on a rapid course of ending the program. Since the Fed is buying long-term debt for QE3, the clarification that there is a strong possibility of them still buying into the next year as helped boost bond prices during morning trading.
We have an afternoon event to watch today, but I don’t believe it will have a noticeable influence on today’s mortgage rates. That would be the release of the Fed Beige Book report at 2:00 PM ET. This report is named simply after the color of its cover, but is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by Federal Reserve region throughout the U.S. I don’t think we will see any significant surprises in this report, so any reaction to it this afternoon will likely have a minimal impact on mortgage rates.
With exception to the second day of Chairman Bernanke’s congressional testimony, the only things of relevance scheduled for release tomorrow are the weekly unemployment update from the Labor Department at 8:30 AM ET (348,000 new claims expected) and June’s Leading Economic Indicators (LEI) at 10:00 AM. The LEI is a Conference Board index that attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 0.3% increase, meaning it is predicting minor economic growth over the next few months. A large decline in the index and a higher number of initial unemployment claims would be good news for the bond and mortgage markets.