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Lake Tahoe Home Loans and Lake Tahoe Mortgage Loan Rates – December 5, 2013

Lake Tahoe Home Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Loans, Lake Tahoe Mortgage Loan Rates, and Lake Tahoe Mortgage Rates:

Thursday’s bond market opened in negative territory again following the release of stronger than expected economic data. Stocks are fairly flat with the Dow down 9 points and the Nasdaq up 2 points. The bond market is currently down 4/32, but due to strength during early afternoon trading yesterday we will likely see little change in this morning’s mortgage rates if comparing to yesterday’s morning pricing.

Yesterday’s afternoon release of the Fed Beige Book didn’t reveal any significant surprises. Most of the regional updates showed similar results to the previous versions in employment, housing and manufacturing activity. In short, the report indicated that many sectors continued to grow at a moderate pace. This was expected and didn’t cause much alarm or joy in the markets yesterday. The improvement in bonds and mortgage rates yesterday came after morning pricing was issued but before the Beige Book release.

The first of today’s three pieces of economic data was the revised 3rd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It came in with a 3.6% annual rate of growth, exceeding forecasts and was much stronger than the initial 2.8% estimate. Since the GDP is the total of all goods and service produced in the U.S. during the quarter, this means the economy was much stronger than many had thought. And because weaker economic conditions make long-term bonds more appealing to investors, this was clearly bad news for the bond market and mortgage rates.

We also got last week’s unemployment numbers early this morning, but they didn’t bring any better news. Today’s release showed that 298,000 new claims for unemployment benefits were filed last week. This was well short of forecasts (330K) and a noticeable decline from the previous week’s revised total of 321,000, indicating a strengthening, not weakening employment sector. Therefore, this data is also negative news for mortgage rates.

The Commerce Department announced late this morning that October’s Factory Orders fell 0.9%, pointing towards manufacturing sector weakness. However, this was close to forecasts of a 1.0% decline and came in a moderately important report, so its impact on this morning’s trading has been minimal.

Tomorrow has three more reports being released, including one of the most important reports we see each month. The key Employment report for November will be released at 8:30 AM ET and all eyes in the markets will be watching. It is comprised of many statistics and readings, but the most watched ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for a 0.1% decline in the unemployment rate to 7.2% while 188,000 new jobs were added to the economy. The income reading is forecasted to show an increase of 0.2%. An ideal scenario for mortgage shoppers would be a higher unemployment rate than October’s 7.3%, a smaller increase in payrolls (or a decline) and no change in the earnings reading. If we are fortunate enough to hit the trifecta with all three, we should see the stock markets fall, bond prices rise and mortgage rates move much lower tomorrow. However, stronger than expected readi! ngs would likely fuel a stock rally and bond sell-off that would lead to mortgage rates moving higher again.

October’s Personal Income and Outlays data is scheduled for early tomorrow morning also. This data measures consumers’ ability to spend and their current spending habits. This is important because consumer spending makes up over two-thirds of the U.S. economy. It is expected to show that income rose 0.3% and that spending increased 0.3%. Weaker than expected readings would mean consumers had less money to spend and were spending less than thought. That would be theoretically favorable news for bonds and mortgage pricing, although the Employment data will be the focus of tomorrow morning’s trading.

The final report of the week is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET tomorrow. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the economy, any related data is watched closely. It is expected to show a reading of 75.1, which would be no change from last month’s final reading of 75.1. A large decline in confidence would be considered good news for the bond market and mortgage rates.