Rate Lock Advisory

Tuesday, May 26th

Tuesday’s bond market has opened well in positive territory due to weekend Middle East news. Stocks are reacting to the same headlines, pushing the Dow higher by 97 points and the Nasdaq up 317 points. The bond market is currently up 17/32 (4.47%), which should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point if compared to Friday’s early pricing. The bond and stock markets were closed yesterday for the Memorial Day holiday.

17/32

Bonds

30 yr - 4.49%

97

Dow

50,677

317

NASDAQ

26,661

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

Consumer Confidence Index

The Conference Board’s Consumer Confidence Index (CCI) for May was this morning’s only relevant economic report. They announced a reading of 93.1 that was higher than expected, but an upward revision to April’s reading kept the month-over-month decline in line with forecasts. April’s reading was changed from 92.8 to 93.8, meaning surveyed consumers felt a little better about their own finances last month than previously thought. However, the revised numbers still leave a decline for May, indicating consumers are growing more concerned about their finances. Since waning confidence usually translates into softer consumer spending levels, we can still label the report slightly favorable for bonds and mortgage rates.

High

Positive

Geopolitical/Financial Issues

Even though this morning’s sole report gave us somewhat good news, it is weekend headlines about progress towards a peace deal with Iran that is fueling today’s bond rally. News broke that the U.S. and Iran had made significant progress in peace talks over the weekend that included opening the Strait of Hormuz. Oil prices immediately dropped, easing inflation concerns, but due to the weekend and yesterday’s holiday, this is the first opportunity for the bond market to react to the news. Of course, it should come as of no surprise by now that there are already headlines this morning about military action resuming near the strait that puts any potential peace deal into question. Yet, the markets are still reacting as if there will be a deal soon.

Medium

Unknown

None

The rest of the week four more monthly or quarterly economic reports that we will be watching in addition to a couple of Treasury auctions and some Fed speeches. There is also the potential for more headlines from the Middle East that will affect the markets, possibly as soon as this afternoon if it appears the ceasefire will not hold.

Low

Unknown

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

Tomorrow doesn’t have any relevant economic data that we need to be concerned about, but does have a few other events that may have an impact on the markets and mortgage rates late in the day. They begin with the 1:00 PM ET results announcement of this week’s 5-year Treasury Note auction. This is the first of the two auctions that we will be following, although neither is expected to cause a noticeable move in rates since they are sales of shorter-term securities and rates are based on long-term debt. Favorable news for rates would be a strong demand for the securities even though any reaction is likely to be minimal.

Medium

Unknown

Fed Talk

The other events set for tomorrow are Fed speakers that are talking about topics related to the economy and/or monetary policy. There is one set for 3:55 PM ET tomorrow afternoon with Fed Governor Lisa Cook and another at 8:00 PM ET by Vice Chair Philip Jefferson. This means if the bond and mortgage markets have a reaction to what is said, it will be reflected in Thursday morning’s pricing.

High

Unknown

Inflation News

Overall, Thursday is the most important day of the week for rates due to the five reports being released that day and the significance of them, one including the Fed’s preferred inflation readings. Friday is the best candidate for calmest day of the week. There is little doubt that we will see plenty of movement in the markets and mortgage pricing again this week. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate.

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.