Lake Tahoe Mortgage Rates and Lake Tahoe Home Loan Rates:
Thursday’s bond market initially opened well in negative territory, extending yesterday’s massive sell-off, but has since erased a good part of those losses. The stock markets followed suit with sizable losses of their own. However, they have not made the same move upward after opening that bonds have. The Dow is currently down 176 points on top of yesterday’s 206 point loss. The Nasdaq is down 36 points. The bond market is currently down 5/32, which is likely going to add another .125 of a discount point to yesterday’s spike in mortgage rates. The benchmark 10-year Treasury Note is now yielding 2.38%. That is the highest since August, 2011.
There were three pieces of economic data posted this morning, starting with last week’s unemployment numbers from the Labor Department at 8:30 AM ET. They announced that 354,000 new claims for unemployment benefits were filed last week. This was a good sized increase from the previous week’s revised 336,000 and well above forecasts of 340,000 initial claims. This indicates that the employment sector was weaker than many had though last week, making the data favorable for the bond market and mortgage rates.
At 10:00 AM ET, the National Association of Realtors said that sales of previously owned homes rose 4.2% last month. This was a bigger increase in sales than was expected, pointing towards a strengthening housing sector. Since a strengthening housing sector means broader economic growth is more likely, we should consider the data negative for mortgage rates.
May’s Leading Economic Indicators (LEI) was also posted at 10:00 AM, revealing a 0.1% increase compared to the 0.2% that was expected. This Conference Board release attempts to predict economic activity over the next three to six months, so we can consider this favorable for the bond market and mortgage pricing. However, it is a minor variance in a moderately important report, so its impact on today’s trading has been minimal.
There is nothing of relevance to mortgage rates scheduled for release tomorrow, so normally we would look towards stocks to give bond trading and mortgage rate direction. However, that traditional trading pattern (bad for stocks is good for bonds) has not been the case the past couple days. This leaves us little to base predictions on, but I suspect it will be a much calmer day than yesterday or today. The light agenda will allow us to address the end result of the Fed’s actions and what to look forward to in the immediate future. Also, even though yesterday’s spike in bond yields and mortgage rates caught everyone in the industry by surprise, the overwhelming consensus is that the move was a drastic overreaction. This means there is a good possibility of seeing some correction in the immediate future. The possibility of seeing the 10-year Treasury Note yield below 2.00% in the next month or two is extremely low. On the other hand, I believe there is room for improvement in mortgage pricing within the next couple business days with little risk of seeing another significant upward move. Therefore, since the damage is done and the worst appears to be behind us, I am maintaining an optimistic stance towards mortgage rates for the near term. At least for the time being that is.