Lake Tahoe Mortgage Rates and Lake Tahoe Home Loan Rates:
Thursday’s bond market has opened well in negative territory due to stronger than expected results from today’s important economic data. The stock markets are showing sizable gains with the Dow up 137 points while the Nasdaq has gained 39 points. The bond market is currently down 24/32, which will erase yesterday’s afternoon improvements and then some. If your lender did not revise rates lower late yesterday, you should see an increase in this morning’s rates of approximately .125 – .250 of a discount point. If your lender did change rates intra-day yesterday, the increase this morning will likely be approximately .375 – .500 of a discount point.
Both of this morning’s economic releases revealed stronger than expected results. Early this morning, the Labor Department said 326,000 new claims for unemployment benefits were filed last week. This was much lower than the 345,000 that was expected and the previous week’s revised total, indicating that the employment sector was stronger than many had thought.
The Institute for Supply Management (ISM) gave us their July manufacturing index late this morning, announcing a reading of 55.4 that exceeded forecasts by several points. That means that surveyed business executives felt business was much stronger in July than analysts were expecting to see. Therefore, the data is bad news for the bond market and mortgage rates, especially following yesterday’s stronger than forecasted GDP reading. Data that points towards a strengthening economy has a negative impact on long-term securities such as mortgage-related bonds.
Tomorrow morning has three reports scheduled for release that are likely to influence bond trading and mortgage pricing with one arguably the most important report we see each month when the Labor Department posts their monthly Employment report for July. This report gives us the U.S. unemployment rate, number of jobs added or lost during the month and the average hourly earnings reading for July. The best scenario for the bond market is rising unemployment, a sizable loss of jobs and little change in earnings. It is expected to show that the unemployment rate slipped 0.1% to 7.5% last month while approximately 175,000 jobs were added to the economy. Due to the importance of these readings, we will most likely see quite a bit of volatility in the markets and mortgage pricing tomorrow morning following their 8:30 AM ET posting.
June’s Personal Income and Outlays data will also be posted early tomorrow morning. This report helps us measure consumer ability to spend and current spending habits. If it shows sizable increases, bond selling could lead to higher mortgage rates. Current forecasts are calling for an increase of 0.5% in income and a 0.4% rise in spending. A larger than expected increase in income means consumers have more funds to spend, which is not favorable to bonds because consumer spending makes up over two-thirds of the U.S. economy. We would like to see declines in spending and income that would indicate economic weakness, but the smaller the increase in each, the better the news for mortgage rates.
The third report of the day and final release of the week will be June’s Factory Orders data at 10:00 AM ET. It helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week’s Durable Goods Orders report that tracks orders for big-ticket items only. Since a significant portion of the data was released last week, this report likely will not have much of an impact on the markets. Analysts are expecting to see an increase in new orders of approximately 2.2%. A smaller than expected increase would be considered good news for bonds and mortgage pricing, but due to the importance of the morning’s other data, I don’t believe this report will have much of an influence on mortgage rates, regardless of its results.