Sunday, June 7th
This week brings us only four monthly economic reports, along with a couple of Treasury auctions. However, two of the scheduled reports are highly influential and may have a strong impact on rates. It is very likely that we will see plenty of movement in rates the middle days, but could see a noticeable move multiple days.
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Bonds
Market Closed
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Dow
Market Closed
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NASDAQ
Market Closed
Trailing 90 Days - National Average
High
Negative
Tomorrow doesn’t have anything of importance scheduled for release, but we should see a reaction to weekend news that Iran has fired missiles at Israel, raising concern that the ceasefire is in jeopardy after peace talks seemed to have stalled. It will be interesting to see how strong the markets will react after Friday’s significant post-Employment report sell-off in stocks and bonds. At this time, it looks as if bonds will extend Friday’s selling, possibly starting the week with another increase in mortgage rates.
Medium
Unknown
May's Existing Home Sales report from the National Association of Realtors will start this week's economic calendar late Tuesday morning. This release tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are expecting to see an increase from April’s sales. As with most economic reports we get, weaker than expected numbers would be favorable to mortgage rates.
High
Unknown
The first highly important release of the week will be May’s Consumer Price Index (CPI) that will be posted Wednesday morning at 8:30 AM ET. It measures inflationary pressures at the consumer level of the economy. This data is watched closely and has the potential to lead to significant volatility in the bond market and mortgage pricing if it shows a major surprise. Rising inflation makes a bond's future fixed interest payments less valuable to investors and makes the Fed more likely to raise key short-term rates before they lower them again. Forecasts have the overall index rising 0.5% for the month while the more important core data that excludes volatile food and energy costs is expected to rise 0.3%. Annual readings are predicted to rise from April's year-over-year rate also. Weaker than expected readings would be very good news for mortgage rates.
Medium
Unknown
Also Wednesday is the first relevant Treasury auction of the week. Results of the day's 10-year Note auction will be announced at 1:00 PM ET. If investor demand was high for these securities, we may see bonds rally during afternoon trading. However, weak interest in these types of sales often lead to bond selling and an increase in mortgage rates. This process will be repeated when 30-year Bonds are sold Thursday. We should see a stronger reaction to this week’s sales than other recent short-term auctions because these are for long-term securities and mortgage rates are based on long-term debt.
High
Unknown
Thursday has another big inflation reading in addition to the weekly unemployment update. May's Producer Price Index (PPI) will be released at 8:30 AM ET. It is the sister release of Wednesday's Consumer Price Index (CPI), except it tracks producer or wholesale inflation. As with the CPI, this version has two headline readings that traders will be watching. Forecasts for this report have the overall reading rising 0.7% and core data up 0.4%. Weaker inflation numbers are good news for bonds and mortgage pricing.
Medium
Unknown
The University of Michigan will close out this week's economic data when they announce their preliminary Index of Consumer Sentiment for June late Friday morning. This index is a measure 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 weaker reading than May's final 44.8 would be an indication that consumers are less confident in their own finances and be labeled good news for rates. Analysts are expecting to see it come in at 46.0.
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Unknown
Overall, Wednesday is the most important day of the week for rates due to the significance the CPI carries in the markets, followed by the afternoon auction results. Tomorrow could also be an active day for rates due to the weekend Middle East headlines also. The calmest day will likely be Tuesday unless something unexpected happens. Because of the Fed's mandatory two-week quiet period ahead next week's FOMC meeting, we won't have Fed speeches to fill the gaps in this week's calendar. The little that is being released this week has the potential to cause a big swing in the markets. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.
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... 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.