Lake Tahoe Mortgage Rates and Lake Tahoe Home Loan Rates:
Friday’s bond market has opened in positive territory, extending a strong late afternoon rally from Thursday. The stock markets are flat with the Dow and Nasdaq both down only a couple points. The bond market is currently up 11/32, which should improve this morning’s mortgage rates by approximately .500 of a discount point if comparing to yesterday’s morning pricing. If your lender revised lower late yesterday, you may see less of an improvement in this morning’s rates.
Yesterday’s late rally in bonds was a result of rumors swirling and a Wall Street Journal story that the Fed will ease market concerns regarding if and when they will begin to taper their current bond buying program (QE3). This is expected to come during next week’s FOMC meeting and Chairman Bernanke’s press conference that will follow. This was big news in the bond market because the recent spike in bond yields and mortgage rates were mostly due to worries the Fed was preparing to wind down that program. The topic is relevant to mortgage rates because under the QE3 program, the Fed is buying mortgage-related bonds. If that buying disappears, it is believed that bond prices will fall, pushing mortgage rates higher.
There were three economic reports posted this morning that were relevant to the mortgage markets. The first was May’s Producer Price Index (PPI) from the Labor Department at 8:30 AM ET. They announced that the overall PPI reading rose 0.5% and the core data was up 0.1%. The overall reading exceeded forecasts of a 0.1% rise, meaning that inflationary pressures at the manufacturing sector of the economy were a little stronger than expected. That is bad news for bonds, but the more important core reading that excludes more volatile food and energy prices matched expectations. Therefore, we should consider the data neutral-to-slightly negative for mortgage rates.
The second report of the morning was May’s Industrial Production data at 9:15 AM ET that revealed output at U.S. factories, mines and utilities was unchanged from April’s level. Analysts were expecting to see a 0.1% increase in this report. It was a minor variance in a moderately important piece of data so its impact on today’s trading has been minimal.
June’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment came at 9:55 AM ET. It showed a reading of 82.7 that fell slightly below analysts’ forecasts of 83.0 and was a decline from May’s 84.5. That is good news for the bond market and mortgage pricing because it means surveyed consumers were less optimistic about their own financial and employment situations than many had thought. We consider that to be favorable news for the bond and mortgage markets because waning confidence usually means consumers are less likely to make a large purchase in the near future, helping to limit economic growth.
Next week isn’t overly busy with a high number of relevant economic reports and other events that we need to be concerned with. However, most of what is scheduled is considered to be highly important. What we will get includes a key measurement of inflation at the consumer level of the economy and an FOMC meeting that will be followed by updated economic forecasts from the Fed and another press conference with Chairman Bernanke. None of these are set for Monday, so we can expect weekend news to drive the markets early Monday morning. No doubt it will be an active week in the financial and mortgage markets though, particularly the middle part of the week. Look for details on next week’s calendar in Sunday’s weekly preview.