Rate Lock Advisory

Sunday, November 16th

This week brings us the release of only three economic reports, one of which is a major report that was previously delayed by the government shutdown. In addition to the data, there also is another Treasury auction, the FOMC minutes release and a large number of Fed-member speaking engagements. We may also get additional economic data now that government workers have returned to their desks, but the new release schedule for all but one of the delayed reports has not been posted yet.

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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

Fed Talk

Tomorrow has no important data scheduled for release, but there are a couple of Fed speeches that show topics related to economic outlook and monetary policy. Fed Vice Chair Jefferson will be speaking in Kansas City at 9:30 AM ET and Governor Waller is set to speak in London at 3:35 PM ET. Both of these speeches will draw attention and could affect bond trading if they say something that comes as a surprise to the markets.

Medium

Unknown

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

There is a 20-year Treasury Bond auction taking place Wednesday that may come into play during afternoon hours. Both of last week’s long-term auctions drew a lackluster demand from investors compared to other recent sales. If the 1:00 PM ET results announcement indicates there was a stronger demand for the securities, we may see bond prices rise and mortgage rates improve slightly before the end of the day. On the other hand, another soft sale could pressure the bond market and lead to an upward move in rates.

Medium

Unknown

FOMC Meeting Minutes

Another Wednesday afternoon event will be the 2:00 PM ET release of the minutes from last month's FOMC meeting. Traders will be looking for any indication of what the Fed is considering doing at next month's meeting. The consensus just a few months ago was a third quarter-point rate cut of the year, but the government shutdown that blocked key data from being released puts that into question. These minutes will help show how the lack of data was affecting the Fed’s thought process. Now that the shutdown has ended, they should have at least some of the delayed data before they meet again December 9-10th. However, not knowing which reports they will have before their next FOMC meeting could have bond traders looking backward to the previous meeting to help form an opinion about what is likely to happen next month.

High

Unknown

Employment Situation

We will get our first shutdown-delayed economic release when September’s Employment report is posted Thursday at 8:30 AM ET. This report is usually highly influential on the financial and mortgage markets. September’s data is a bit aged at this point, possibly lessening its impact on the markets. However, since there has been so little other data released over the past seven weeks, we may still see a fairly strong reaction to its contents. Forecasts before the delay had the unemployment rate holding at August's 4.3%, 39,000 new payrolls and a 0.3% rise in average earnings. Analysts haven’t posted revised predictions yet, meaning we are using them until revised forecasts are announced. Good news for rates would be weaker numbers that would signal problems in the employment sector. This would also make another Fed rate cut more possible at next month’s FOMC meeting.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

October's Existing Home Sales report will be posted at 10:00 AM ET Thursday. The National Association of Realtors is expected to announce an increase in home resales, meaning the housing sector improved slightly last month. That would be relatively bad news for the bond market and mortgage pricing because a stronger housing sector makes broader economic growth more likely. But unless it shows a significant surprise, this data will likely not have a major impact on Thursday's rates.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

Concluding the week's economic releases will be the revised University of Michigan Index of Consumer Sentiment for November at 10:00 AM ET Friday morning. Analysts are expecting to see a small increase from the 50.3 preliminary reading two weeks ago, meaning surveyed consumers felt better about their own financial and employment situations than previously thought. Bond traders would prefer to see a decline because waning confidence usually translates into consumers delaying a large purchase, restricting economic growth. The lower the reading, the better the news for rates.

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Unknown

none

Overall, Thursday is likely to bring the biggest move in rates unless Wednesday’s FOMC minutes give us a big surprise. The best candidate for calmest day is Tuesday because tomorrow’s Fed speeches may cause a reaction in the bond and mortgage markets. We are expecting to see multiple days with a noticeable change in mortgage pricing this week. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

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... Lock if my closing was taking place between 21 and 60 days... Lock 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.