Rate Lock Advisory

Sunday, June 23th

This week has six monthly and quarterly economic reports that may influence mortgage rates, in addition to a couple of Treasury auctions and more Fed-member speeches. Two of the economic reports are considered to have elevated importance and may impact rates more than the others. With at least one item scheduled each day except for tomorrow, it is safe to assume we will see more movement in mortgage rates this week.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium


Unknown


Consumer Confidence Index

June's Consumer Confidence Index (CCI) will start this week’s activities at 10:00 AM Tuesday. The CCI comes from the Conference Board (a New York-based business research group) and is fairly important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future. Consumer spending makes up over two-thirds of the U.S. economy, so rising confidence can contribute to overall economic growth. If it shows a sizable increase from last month, we can expect to see a negative reaction in bonds and mortgage rates. Forecasts are predicting a reading of 100.0, down from last month's 102.0 as consumers continue to be cautious about the high cost of goods. The lower the reading, the better the news it is for bonds and mortgage pricing.

Low


Unknown


New Home Sales

The second piece of data coming this week will be May's New Home Sales report at 10:00 AM ET Wednesday that helps us measure housing sector strength by tracking sales of newly constructed homes. It is the sister release to last week's Existing Home Sales report but covers a much smaller portion of sales. Wednesday's release is expected to show an increase in sales, although it will likely not have much of an impact on mortgage rates because this data covers such a small percentage of the housing sector.

Medium


Unknown


Treasury Auctions (5,7,10,20,30 year)

Wednesday also has the first of this week's two Treasury auctions that we will be watching. They both have the potential to affect bond trading enough to alter rates slightly. The key is how strong investor interest is in the securities. 5-year Notes will be sold Wednesday while 7-year Notes will be auctioned Thursday. If they are met with a strong demand from investors, we could see bond prices rise and mortgage rates improve slightly during afternoon trading midweek. On the other hand, if the sales draw a lackluster interest from investors, mortgage rates may move slightly higher during afternoon trading those days.

High


Unknown


Durable Goods Orders

In addition to the typical weekly unemployment update, Thursday also has two other early morning reports that we will be watching. The more important of them is May's Durable Goods Orders report. This report will give us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be quite volatile from month to month, so a moderate variance from expectations is not as meaningful as it is in other reports. Forecasts show a 0.6% decline in May's new orders. A much larger decline would be good news for mortgage pricing.

Low


Unknown


GDP Rev 2 (month after Rev 1)

The second revision to the 1st Quarter Gross Domestic Product (GDP) reading is also set for release at 8:30 AM ET Thursday. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month's release of the current quarter's initial GDP reading. Last month's first revision showed the economy grew at a 1.3% annual rate. Thursday's update is expected to show the same. A large upward revision in the GDP would be considered negative for rates as it means the economy was stronger than thought.

High


Unknown


Personal Income and Outlays

Friday has the final two reports, starting with Personal Income and Outlays data for May at 8:30 AM ET. It will give us an indication of consumer ability to spend and current spending activity. The theory is, if consumer income is rising, they have more money to spend each month. Analysts are expecting to see a 0.4% rise in income while spending rose 0.3% during the month. This report also includes an important inflation reading that the Fed relies on during their FOMC meetings (PCE). It is expected to show a 0.1% increase in the core PCE Index, a sign that inflation is slowing. Since rising inflation erodes the value of a bond's future fixed interest payments, an unexpected increase in the PCE would make bonds less appealing to investors and likely lead to higher mortgage rates Friday.

Medium


Unknown


Univ of Mich Consumer Sentiment (Rev)

The University of Michigan will close out this week's data when they update their Index of Consumer Sentiment for June late Friday morning. This index is another sign of consumer willingness to spend. Waning confidence in personal financial and employment situations usually translates into softer levels of consumer spending, restricting economic growth. A downward revision would be considered good news for bonds and rates. Forecasts show a slightly higher reading than the preliminary reading of 65.6 from two weeks ago.

Medium


Unknown


Fed Talk

There are also a good number of Fed speeches scheduled this week that will be watched. Only one that is scheduled for noon ET Tuesday looks to have the potential to cause a noticeable move in mortgage pricing and that is only if there are any significant surprises in it. The others may have a minor impact on bond trading.

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Unknown


none

Overall, Friday is the most important day for rates due to the significance the PCE index carries in the markets. Thursday may also be an active day for rates. The calmest may be either tomorrow with nothing scheduled or Wednesday since the week’s least important report comes that day. If floating an interest rate and closing in the near future, keep an eye on the markets- especially the latter days of the week.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.