Financing Homes in Lake Tahoe and Truckee since 1992.

Lake Tahoe Mortgage Rate Trends- January 8, 2015

Thursday’s bond market has opened in negative territory again with stocks in rally mode. The major stock indexes are showing another round of early sizable gains with the Dow up 262 points and the Nasdaq up 74 points. The bond market is currently down 13/32 (2.01%), which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

Yesterday afternoon’s release of the FOMC minutes did not reveal too much in terms of surprises. They showed there was plenty of discussion on carefully crafting the verbiage of the post-meeting statement, particularly about using the word “patient” regarding key short-term interest rates and when they will make the first increase. Fed Chair Yellen helped narrow the time line when she said in her press conference that it won’t be until after a couple of future FOMC meetings. That left the window between April and December. The detailed minutes yesterday did not do much in guiding market participants to think it will come late spring, summer, fall or winter. That will raise the anxiety around March and April meetings as that time line approaches.

Last week’s unemployment figures were posted early this morning. They showed that 294,000 new claims for unemployment benefits were filed last week. This was higher than the 290,000 that was forecasted (good news for rates) but was still a decline from the previously week’s total of 298,000 (bad news). This is only a weekly figure, so the minor differences wasn’t enough to affect bond trading or mortgage rates this morning.

Tomorrow morning brings us the release of the almighty monthly Employment report. The Labor Department will post December’s employment figures at 8:30 AM ET tomorrow. This report is arguably the single most important monthly release we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Rising unemployment, a decline in payrolls and flat earnings would be ideal news for the bond market. Current forecasts call for a 0.1% decline from November’s unemployment rate of 5.8%, 245,000 new jobs added to the economy and an increase in earnings of 0.2%. If we see weaker than expected results, the bond market should rally and stocks should fall, improving mortgage rates noticeably tomorrow. However, stronger than expected readings will likely raise optimism about the economy, pushing stocks and mortgage rates sharply higher.