Lake Tahoe Home Loans, Lake Tahoe Mortgage Loans, Lake Tahoe Home Loan Rates, Lake Tahoe Mortgage Rates and Lake Tahoe Mortgage Loan Rates:
This week brings us the release of only three pieces of monthly economic data in addition to two Treasury auctions that have the potential to affect mortgage rates. Despite the low number of reports, we still will likely see a fair amount of movement in the markets and mortgage pricing due to the importance of those economic reports and the likelihood of the Syria issue being in the spotlight with congress coming back into session. The economic data is set for late in the week and the Treasury auctions will take place mid-week. It is hard to say that exactly which day a vote will come in Congress on how to respond to what happened in Syria, but we can expect it to be in the forefront of the news media and on traders’ minds.
There is nothing of relevance scheduled to be posted or announced tomorrow,
Tuesday or Wednesday morning with possible exception to news out of Washington regarding the Congressional proceedings. In the absence of anything on the schedule, look for the stock markets to affect bond trading and mortgage pricing early this week. As long as no major news or events transpire, stock strength will probably lead to bond weakness and higher mortgage rates. If the major stock indexes fall from current levels, bond prices should rise, pushing mortgage rates lower.
There are two Treasury auctions this week that have the potential to influence
mortgage rates. The first is Wednesday’s 10-year Treasury Note auction, which
will be followed by a 30-year Bond auction Thursday. It is fairly common to see
some weakness in bonds before these sales as investors prepare for them. If the
sales are met with a decent demand from investors, indicating that interest in
longer-term securities such as mortgage-related bonds is strengthening, the
earlier losses are usually recovered after the results are announced. The
results of each sale will be posted at 1:00 PM ET of auction day. If demand was
strong, particularly from international investors, we should see mortgage rates
improve during afternoon trading Wednesday and Thursday. However, weak levels of interest could lead to broader selling in the bond market that could push mortgage rates higher.
Friday morning has all three pieces of economic data scheduled with two of them considered to be major releases. Those highly important reports are August’s Retail Sales and Producer Price Index (PPI), both of which will be posted at 8:30 AM Friday. The sales report from the Commerce Department will give us a very important measurement of consumer spending, which is extremely relevant to the markets because it makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.4% increase in sales. Analysts are also calling for a 0.3% rise in sales if more volatile auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate economic growth.
The Labor Department will post August’s Producer Price Index (PPI), giving us
an important measurement of inflationary pressures at the producer level of the
economy. There are two readings that analysts follow in this release. They are
the overall index and the core data reading. The core data is the more
important of the two since it excludes more volatile food and energy prices.
Analysts are predicting a 0.2% increase in the overall index and a rise of 0.1%
in the core data. Stronger than expected readings could fuel inflation concerns
in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond’s future fixed interest payments. As inflation becomes more of a
concern in the markets, bonds become less appealing to investors, leading to
falling prices, rising yields and higher mortgage rates.
The last release of the week will be posted by the University of Michigan late
Friday morning. Their Index of Consumer Sentiment will give us an indication of consumer confidence, which projects consumer willingness to spend. If a
consumer’s confidence in their own financial situation is rising, they are more
apt to make large purchases in the near future. But, if they are growing more
concerned about their job security or finances, they probably will delay making
that large purchase. This influences future consumer spending data and
therefore, impacts the financial markets. It is expected to show a reading of
82.0 that would mean confidence was nearly unchanged from August’s level of
82.1. That would be considered slightly favorable news for bonds and mortgage
rates. Good news for mortgage shoppers would be a sizable decline in the index.
Overall, Friday is the best candidate to be labeled most important day with all
of the week’s economic data scheduled, but we could see noticeable movement in rates multiple days. It is unlikely that we will get a vote in Congress on
Syria during business hours tomorrow, so with nothing else scheduled for
release it looks to be the least important day of the week. The Treasury
auctions raise the possibility of afternoon volatility in the middle part,
although I would not be surprised to see afternoon changes to mortgage pricing
other days also. With the FOMC meeting looming next week, any surprises this
week will affect theories about what the Fed will do regarding their current
bond buying program and lead to noticeable changes in the markets.