Lake Tahoe Home Loan Rates and Lake Tahoe Mortgage Rates:
Tuesday’s bond market has opened flat following no significant surprises in today’s economic data and a fairly calm morning in stocks. The major stock indexes are showing minor losses with the Dow down 21 points and the Nasdaq down 9 points. The bond market is currently nearly unchanged from yesterday’s close, but we should still see an improvement in this morning’s mortgage rates of approximately .125 of a discount point due to strength in trading late yesterday.
June’s Consumer Price Index (CPI) was the first piece of economic data posted this morning. It revealed a 0.5% increase in the overall reading a 0.2% rise in the core data. The overall reading exceeded forecasts of a 0.35 increase but the more important core reading that excludes volatile food and energy costs matched expectations. Therefore, we should consider the data to be neutral to slightly negative for the bond market and mortgage rates.
At 9:15 AM ET this morning, we got June’s Industrial Production data. That release showed a 0.3% increase in output at U.S. factories, mines and utilities last month. It pegged forecasts of 0.3%, so it indicates minor growth in manufacturing and utilities, but not any more than what analysts were expecting to see. Accordingly, it has had little impact on today’s trading or mortgage pricing.
Tomorrow morning has one piece of economic data that is relevant to mortgage rates, but it isn’t known to be highly important or influential. The Commerce Department will post June’s Housing Starts report at 8:30 AM ET that will give us an indication of housing sector strength by tracking construction starts of new homes. Analysts are currently expecting to see a fairly large increase in new starts. However, I don’t see this data having much of an impact on mortgage rates unless it varies greatly from forecasts.
The big news of the day will be the first part of Fed Chairman Bernanke’s semi-annual update about the economy and monetary policy before Congress. He will speak before the House Financial Services Committee tomorrow at 10:00am ET and the Senate Banking Committee Thursday. Analysts and traders will be looking for the Fed’s opinion on the status of the economy and their expectations of future growth, inflation and unemployment concerns that will lead to the Fed’s next monetary policy move. Of particular interest will be the status of the Fed’s current $85 billion monthly bond buying program (QE3). These topics should create a great deal of volatility in the markets during the prepared testimony and the question and answer session that follows. If he indicates that inflation may become a point of concern or anything that hints at rapid economic growth, we can expect to see the bond market fall and mortgage rates rise tomorrow afternoon. The QE3 tapering topic has been ! much discussed and there has been plenty of speculation about it that has led to a great deal of volatility recently in the financial and mortgage markets. Therefore, I am fairly certain that if it is not addressed in Chairman Bernanke’s prepared statement it will come up during Q&A. And with it will probably be further volatility in the bond market and mortgage rates.
Tomorrow afternoon brings us 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. Since Fed Chairman Ben Bernanke’s testimony to Congress hours before gave us a recent update, I don’t think we will see any significant surprises in this report. If this is accurate, we will likely see little movement in mortgage rates during afternoon, at least from this report.