Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends- January 5, 2016

Tuesday’s bond market has opened down slightly with nothing of importance scheduled for release today. Stocks are showing minor losses but after yesterday’s stock sell-off this is likely somewhat welcomed news for stock investors. The Dow is currently down 15 points while the Nasdaq has slipped 3 points. The bond market is currently down 2/32 (2.25%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point. A good part of that increase is coming from yesterday’s afternoon trading when bonds gave back some of their morning’s gains before closing. That move coincided with a rebound in stocks that closed well above their lowest point from earlier in the day.

There is nothing of relevance scheduled for today, but tomorrow has three items that can affect rates. The first of them is the ADP Employment report at 8:15 AM ET. This report has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. It tracks changes in private-sector jobs of the company’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on our calendar. Forecasts are calling for an increase of 190,000 new payrolls. Good news for mortgage rates would be a much smaller increase in payrolls.

The Commerce Department will post November’s Factory Orders data at 10:00 AM ET tomorrow morning. This data gives us a fairly important measurement of manufacturing sector strength. It is similar to the Durable Goods Orders release that was posted just before Christmas, except this report includes orders for both durable and non-durable goods. Durable goods are items that are expected to last three or more years such as appliances, electronics and airplanes. Examples of non-durable goods are food and clothing. Analysts are expecting to see a decline of 0.2% in new orders. This report generally does not have a huge impact on the bond market or mortgage rates, but it can influence bond trading enough to create a minor change in rates if it shows a sizable variance from forecasts. The larger the decline, the better the news it is for mortgage pricing.

Also tomorrow is the release of the minutes from the last FOMC meeting. They will give market participants insight to the Fed’s thinking and concerns regarding the economy, inflation and monetary policy. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what the minutes show. They will be released at 2:00 PM ET, so they won’t affect the markets or mortgage rates until afternoon hours. The last FOMC meeting was followed by revised Fed forecasts and a press conference by Fed Chair Janet Yellen, so the possibility of seeing something unexpected is minimal. Still, market participants will be looking for any tidbits about the decision to raise key short-term interest rates and when the next move may be made.