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Wednesday’s bond market has opened in negative territory yet again even though this morning’s economic data gave us mixed results. The stock markets are showing minor gains with the Dow up 30 points and the Nasdaq up 5 points. The bond market is currently down 12/32 (2.80%), which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.
The first of this morning’s two report was the ADP Employment report for March. It revealed an increase of 191,000 private-sector jobs last month, falling short of the 200,000 forecast. The increase in payrolls was a healthy number, but since it short of expectations, we can consider the data to be slightly positive for bonds and mortgage pricing. The key and more reliable employment numbers will come from the Labor Department’s monthly release Friday morning.
February’s Factory Orders report was posted at 10:00 AM ET this morning, revealing a 1.6% increase in new orders for durable and non-durable goods. This was stronger than the 1.1% increase that was expected, indicating stronger manufacturing activity. That makes the data negative for the bond market and mortgage rates. However, this isn’t the cause of this morning’s bond selling. It appears traders are positioning themselves for a strong Employment report Friday.
Tomorrow also has two reports scheduled for release, but neither are expected to have a significant impact on mortgage rates. Both of the reports are considered to be of low importance to the markets. February’s Goods and Services Trade Balance that will give us the size of the U.S. trade deficit, but is not considered to be of high importance to mortgage rates. This report can influence other markets more than bonds and usually has little impact on mortgage rates unless it shows a significant variance from forecasts. It is expected to show a trade deficit of $39.3 billion. Regardless of its results though, I doubt this data will have a noticeable impact on tomorrow’s mortgage rates.
The other data being posted tomorrow is last week’s unemployment numbers. They are expected to show that 320,000 new claims for unemployment benefits were filed last week, up from 311,000 of the previous week. Rising initial claims indicates employment sector weakness, the higher the number the better the news it is for bonds and mortgage rates.