Lake Tahoe Mortgage Loan Rates and Lake Tahoe Home Loan Rates:
Tuesday’s bond market has opened flat with only minor economic data posted this morning. Stocks are showing noticeable losses with the Dow down 90 points and the Nasdaq down 20 points. The bond market is currently down 2/32, which will likely keep this morning’s mortgage rates very close to yesterday’s levels.
Today’s only economic data was June’s Trade Balance that revealed the U.S. trade deficit fell to $34.2 billion. This was much smaller than the $43.4 billion that was expected and the lowest deficit since October 2009, but this report usually does not directly influence mortgage rates. It does affect the value of the U.S. dollar versus other currencies that comes into play when international investors sell current holdings of U.S. securities, such as mortgage bonds. Still, the data is considered to be of low importance to the bond market and mortgage rates and appears to not have had much of an impact on this morning’s pricing despite the wide variance from forecasts.
This morning’s bond market opening has the benchmark 10-year Treasury Note yield at 2.65%. This is well above the 2.49% that, in my opinion, would signal a potential downward trend in mortgage rates. Yet, it is also well below the 2.95% that we were at approximately 2 years ago when bond yields quickly spiraled lower and mortgage rates plummeted. With little to drive bond trading and mortgage rates this week, there is a decent possibility of the 10-year Note remaining close to its current level. However, as the month progresses and we get more economic data for the markets to digest, I firmly believe that we are going to see it move much closer to one of those two points.
Since mortgage rates tend to follow bond yields, we would prefer the move to be lower. It will be interesting to see which way direction we head, especially as we get closer to the September FOMC meeting. That is when many analysts believe that Chairman Bernanke and friends will likely begin the process of winding down the Fed’s bond buying program (QE3). If the economic data that precedes the meeting indicates the economy is not growing as quickly as many Fed members had expected, therefore delaying the tapering, we should see yields and mortgage rates move noticeably lower. On the other hand, strong data that supports the theory that the economy can continue to expand with less stimulus will likely equate to a spike in bond yields and higher mortgage rates.