Lake Tahoe Mortgage Rates and Lake Tahoe Home Loan Rates:
Wednesday’s bond market has opened up sharply following some surprisingly weak economic data. The stock markets are showing gains with the Dow up 86 points and the Nasdaq up 22 points. The bond market is currently up 15/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point.
Today’s big news was the second revision to the 1st Quarter Gross Domestic Product (GDP) that showed the economy grew at an annual pace of 1.8% during the first three months of the year. This is the third and final version of the reading that usually has little impact on the markets. However, this was surprisingly weaker than the previous estimate of 2.4% and raises concerns about what this quarter’s reading will show next month. It also underscores my recent comments about whether the sell-off in the bond market was based on speculative economic growth that isn’t really justified.
We also have the first of this week’s two Treasury auctions that have the potential to affect mortgage-related bonds if they show particularly strong or weak investor demand. The Treasury will sell 5-year Notes today and 7-year Notes tomorrow. If they are met with a strong demand, we could see bond prices rise during afternoon trading. This could lead to afternoon improvements to mortgage rates also. But, if the sales draw a lackluster interest from investors, mortgage rates may move higher during afternoon trading.
Tomorrow has two pieces of economic data that we will be watching. The first is the Labor Department’s weekly unemployment update that is expected to show that 345,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week’s 354,000 initial claims, hinting at employment sector strength. Ideally, the bond market would prefer to see an increase in new claims, indicating that the sector weakened instead of strengthened. Since this report tracks only a single week’s worth of initial claims, it often does not affect mortgage rates. But, with so much attention on the Fed’s potential tapering of QE3 and its relation to unemployment, and surprise could have a larger than usually impact on the bond and mortgage markets.
May’s Personal Income and Outlays data is also scheduled for release tomorrow at 8:30 AM ET. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up over two-thirds of the U.S. economy. If consumer income is rising, they have more money to spend each month. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Declines in both of these readings would be good news for the bond market and mortgage rates.