Sunday, June 14th
This holiday-shortened week has four monthly economic reports for the markets to digest, with one being labeled highly important. There are also a few non-data items on the calendar that have the potential to influence mortgage rates, including a Treasury auction and an afternoon of FOMC events. In addition to the scheduled events, we will be watching for reactions to Iran headlines to affect bond trading and mortgage rates.
---
Bonds
Market Closed
---
Dow
Market Closed
---
NASDAQ
Market Closed
Trailing 90 Days - National Average
Medium
Unknown
Activities begin tomorrow morning when May's Industrial Production data will be posted at 9:15 AM ET. This report measures manufacturing strength by tracking output at U.S. factories, mines and utilities. It is considered to be only moderately important to mortgage rates and should require a sizable variance from forecasts for it to influence mortgage rates. Expectations are for a 0.3% increase from April's production. A decline would be favorable news for mortgage pricing, but this data doesn’t usually draw much more attention.
High
Positive
News this evening that the U.S. and Iran have agreed to a peace deal, confirmed by both sides, should cause a rally in bonds and stocks tomorrow. This is a fluid matter with all of the details not known yet. However, it appears to reopen the Strait of Hormuz immediately and ends the blockade of Iranian ports. Opening the strait is key to bringing gas and energy costs down, easing inflation concerns in the bond market. The signing of the agreement is expected to happen later in the week, so there is still the chance something could change before then. The agreement isn’t going to end all issues, such as nuclear weapons, but they aren’t going to directly affect bond trading and/or mortgage rates either. Cargo and oil ships being able to pass through the Strait of Hormuz is the single most important topic at the moment, making tonight’s headlines very good news for rates.
Low
Unknown
Tuesday's sole economic release will be May's Housing Starts report at 8:30 AM ET. It tells us the number of new home groundbreakings. This is not considered to be as important as other housing reports and usually has a minimal impact on mortgage rates. Market analysts are expecting to see a minor decline in new home construction starts last month. Good news for the bond market and mortgage rates would be a noticeable decline in groundbreakings.
Medium
Unknown
Also Tuesday will be the 20-year Treasury Bond auction. Results of the sale will be posted at 1:00 PM ET, making this an afternoon event for rates. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates. However, if the sale draws a lackluster interest, we could see bonds weaken and mortgage rates move higher Tuesday afternoon because mortgage pricing is based on long-term debt.
High
Unknown
May's Retail Sales report is set for release at 8:30 AM ET Wednesday. This is highly important to the financial and mortgage markets because it will give us insight into consumer spending habits and that category makes up over two-thirds of the U.S. economy. Analysts are expecting to see a 0.5% rise in sales and a 0.6% increase if more costly and volatile auto transactions are excluded. Good news for bonds and mortgage rates would be weaker spending numbers since softer consumer spending restricts economic growth.
High
Unknown
This week's FOMC meeting will adjourn Wednesday afternoon, which also includes revised economic projections from the Fed and a post-meeting press conference with the new Fed Chairman. There is a strong consensus that the Fed will leave key short-term interest rates unchanged at this meeting. The post-meeting statement could cause some volatility if it appears to hint that an increase to key short-term interest rates may be coming soon. The most recent Iran news could come into play during their decision making process since the war has contributed to the increase in inflation. Topics such as relatively strong employment and rising inflation support the theory the Fed will need to bump key rates higher before they lower them again. This meeting includes revised economic projections and their rate predictions (dot plot).
The Fed's projections will give us their predictions for overall economic growth (GDP), unemployment, inflation and future rate adjustments. The meeting will adjourn at 2:00 PM ET as will the release of the post-meeting statement and economic forecasts. The press conference with Chairman Warsh will begin at 2:30 PM ET, meaning these events will affect trading and mortgage rates mid and late afternoon Wednesday.
Medium
Unknown
The last report of the week will be May's Leading Economic Indicators (LEI) at 10:00 AM ET Thursday. The LEI is a Conference Board release that attempts to predict economic activity over the next several months. Since it comes from a business research group and not a governmental agency, its impact on rates is often minimal. Current forecasts show a 0.2% rise in the indicators. A decline would be good news for the bond and mortgage markets.
Low
Unknown
The financial markets will be closed Friday for the Juneteenth Holiday. Most lenders that are open for business will likely use Thursday's afternoon rates or may opt to delay rate locks until next Monday's pricing comes out. We sometimes see a little pressure in bonds ahead of extended weekends as traders look to protect themselves from geopolitical headlines. Since there will be no economic news releases and the markets are closed, we will not be posting a Friday morning update to this report.
---
Unknown
Overall, Wednesday is the most important day for rates by default due to the potential the FOMC events have. The fact the Retail Sales report comes that morning also only solidifies the day as the one most likely to have the biggest move in rates. The calmest day could be Thursday, unless something unexpected happens. It would be prudent to keep an eye on the markets if still floating an interest and closing in the near future, especially the middle days of the week.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float 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.