Lake Tahoe Home Loan Rates and Lake Tahoe Mortgage Rates:
Thursday’s bond market has opened in positive territory despite stronger than expected economic news. The major stock indexes are beginning the day with minor weakness. The Dow is currently down 22 points while the Nasdaq has slipped 3 points. The bond market is currently up 7/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point.
The Commerce Department gave us this morning’s big news with the release of May’s Retail Sales data early this morning. They announced a 0.6% increase in retail-level sales last month that exceeded forecasts of a 0.3% rise. This means that consumers spent more than expected, making the data negative for the bond market and mortgage rates because consumer spending makes up so much of our overall economy. Softening the news a bit was a secondary reading that excludes larger and more volatile auto transactions. It showed a 0.3% increase, matching analysts’ forecasts. Still, the data points towards stronger economic activity, so we need to consider it bad news for mortgage rates.
Also posted early this morning was the Labor Department’s weekly unemployment update. They announced that 334,000 new claims for unemployment benefits were filed last week, down from the previous week’s 346,000 and short of the 345,000 that was forecasted. Unfortunately for mortgage shoppers, this is also unfavorable news since it indicates that the employment sector was a little stronger than many had thought last week.
Today’s 30-year Treasury Bond auction has the potential to affect this afternoon’s bond trading and mortgage rates. Results of the sale will be posted at 1:00 PM ET. Yesterday’s 10-year Note sale was uneventful for the most part. There wasn’t much to be overjoyed with or too concerned about. That doesn’t give us anything to base a prediction on for today’s auction, so we will have to hold our breath and wait for results this afternoon.
Tomorrow has three pieces of economic data for the markets to digest. The first is one of the two key measurements of inflation that we get each month. May’s Producer Price Index (PPI) will be released at 8:30 AM ET tomorrow, giving us a measure of inflationary pressures at the producer level of the economy. There are two readings of this index, the overall and the core data. The core data is considered to be the more important one because it excludes more volatile food and energy prices. A large increase could raise concerns about inflation rising as soon as the economy gains some traction. This would not be good news for bond prices or mortgage rates since inflation erodes the value of a bond’s future fixed interest payments. Rising inflation causes investors to sell bonds, driving bond prices lower, pushing their yields upward and bringing mortgage rates higher. Analysts are expecting to see increases of 0.1% in both readings, signaling inflation was subdued at the manufacturing level of the economy last month.
May’s Industrial Production data will be released at 9:15 AM ET tomorrow and is considered to be moderately important. It measures output at U.S. factories, mines and utilities, giving us a fairly important measurement of manufacturing sector strength. If it reveals that production is rapidly rising, concerns of manufacturing strength may come into play in the bond market. A larger increase than the expected 0.1% would indicate the manufacturing sector is stronger than thought and would likely push mortgage rates slightly higher.
June’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment will close the week’s data late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 83.0, which would be a decline from May’s 84.5. A smaller than expected reading would be considered good news for bonds because it would mean that surveyed consumers were less optimistic about their own financial situations than thought. That often means they are less likely to make large purchases in the near future, but since this report is only moderately important it likely will not influence mortgage rates considerably unless it shows a significant variance from forecasts.