Tahoe Mortgage Update-Sierra Pacific Mortgage Lake Tahoe Mortgage Office:
Thursday’s bond market initially opened in positive territory but has since given those gains back. The stock markets started off with sizable losses before recovering most of that early weakness. As stocks rose, bonds began their pullback. The Dow is currently down only 15 points while the Nasdaq has lost 6 points. The bond market is currently 4/32, which should add another .125 of a discount point to yesterday’s multiple mortgage rate increases.
There were two pieces of economic data posted this morning, neither of which are considered highly important. The first came from the Labor Department who announced early this morning that 340,000 new claims for unemployment benefits were filed last week. This was lower than the 348,000 that was expected and a sizable drop from the previous week’s revised total of 363,000 initial claims. The drop in new claims for benefits indicates the employment sector strengthened last week, making the data negative for the bond market and mortgage rates.
April’s New Home Sales data was posted at 10:00 AM ET this morning, revealing a 2.3% increase in sales of newly constructed homes. This was a little larger increase than analysts were expecting to see, but not enough of a variance to cause much concern or excitement. The number of sales was much higher than forecasted however, a sizable upward revision to March’s sales means the monthly change wasn’t far off from expectations. Therefore, it hasn’t had much of an impact on this morning’s rates.
Tomorrow has the week’s most important economic report with April’s Durable Goods Orders being posted. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years. It is currently expected to show an increase in new orders of approximately 1.6%, indicating the manufacturing sector remained strengthened a little last month. That would be relatively bad news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts would likely have little impact on tomorrow’s mortgage rates.
Also worth noting about tomorrow is the early close for the bond market. The bond market will close at 2:00 PM ET and will remain closed Monday in observance of the Memorial Day holiday. The stock markets are open for a full day today, but will also be closed Monday. This early close and long weekend sometimes adds additional volatility to trading as investors look to protect themselves over the long weekend. Although there isn’t any headline crisis situations going on right now that are expected to make news over the weekend, we have seen a great deal of fluctuation in trading recently without it. Therefore, I would not be too surprised to see a little pressure in bonds tomorrow as market participants head home for the long weekend.