Rate Lock Advisory

Sunday, July 25th

This week has plenty scheduled that is likely to influence mortgage rates. There is at least one item scheduled each day of the week with several days having multiple events. We have seven monthly and quarterly economic releases to be concerned with, in addition to a couple of Treasury auctions, another FOMC meeting and more corporate earnings announcements. With so much scheduled, and some of it highly important to the markets, it is safe to assume that it will be an active week for rates.

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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

Low


Unknown


New Home Sales

The Commerce Department will start this week's activities at 10:00 AM ET tomorrow with the release of June's New Home Sales report. This data tracks sales of newly constructed homes, but they make up a much smaller portion of the housing sector than last week’s existing home sales data. Analysts are expecting to see a rise from May's sales, indicating that the new home portion of the housing sector strengthened last month. Favorable news would be a sizable decline in sales.

High


Unknown


Durable Goods Orders

June's Durable Goods Orders report will be the week’s first highly important event when it is posted at 8:30 AM ET Tuesday. Current forecasts are calling for an increase in new orders of 2.1% from May to June. This data gives 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. A much stronger than expected rise may lead to higher mortgage rates Tuesday morning because it would be a sign of economic strength. Worth noting though, this data is known to be extremely volatile from month to month, so a moderate difference between forecasts and the actual reading may not move the markets or mortgage rates like it would if coming in other reports.

Medium


Unknown


Consumer Confidence Index (Conference Board)

Late Tuesday morning, the Conference Board will release their Consumer Confidence Index (CCI) for July. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. If consumers are more confident in their own financial and employment situations, they are more apt to make large purchases in the near future. This is important because consumer spending makes up such a large portion of our economy. If the CCI reading is weaker than expected, meaning consumers were less confident than analysts thought and likely will delay making a large personal purchase, we may see bond prices rise and mortgage rates drop Tuesday morning. Current forecasts are calling for a reading of 124.5, which would be a decline from June's 127.3. The lower the reading, the better the news it is for mortgage rates.

Medium


Unknown


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

There are also two potentially relevant Treasury auctions this week, beginning with Tuesday's 5-year Note sale followed by Thursday's 7-year Note auction. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in bonds that leads to upward revisions to mortgage rates. On the other hand, strong investor demand in the sales usually makes bonds more attractive to investors, bringing more funds into the bond market. The buying of bonds during this process translates into lower yields and a downward move in mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during early afternoon hours Tuesday and/or Thursday.

High


Unknown


Federal Open Market Committee (FOMC) Statement

Wednesday has no relevant economic data scheduled for release, but the afternoon has the adjournment of the FOMC meeting that begins Tuesday. All meetings are followed by a press conference with Fed Chairman Powell, but this meeting does not include revised economic projections. There is virtually no possibility of the Fed changing key short-term interest rates this week. What the markets will be looking for is an indication of what Chairman Powell and friends are considering doing in the future to control inflation and keep the economy growing. Of particular attention will be talk of tapering their current bond buying program. How the financial and mortgage markets react will depend on what the post-meeting statement shows. The meeting adjournment and statement release will occur at 2:00 PM ET while the press conference will start at 2:30 PM ET.

High


Unknown


Gross Domestic Product (GDP)

Thursday brings a major release with the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This index is considered to be the benchmark indicator of economic growth or weakness. It is the total of all goods and services that are produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important report we get regularly. Current forecasts are estimating that the economy grew at an annual rate of 8.2% during the April through June months. A stronger GDP number would be bad news for rates since it would mean the economy was stronger than thought.

Medium


Unknown


Personal Income and Outlays

June's Personal Income and Outlays data is the first of Friday morning's three relevant reports. This one helps us measure consumer ability to spend and current spending habits. Forecasts are calling for a decline of 0.6% in income and a 0.7% rise in spending. This report also includes the Fed's preferred inflation gauge (PCE Index), which is expected to show a 0.5% increase from May. Stronger readings indicate economic growth. Therefore, smaller increases will be considered good news for mortgage pricing.

Medium


Unknown


Employment Cost Index (Quarterly)

Also early Friday will be the 2nd Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits. This release will give us a measurement of wage-inflation that makes long-term securities, such as mortgage bonds, less attractive to investors. If it shows a large increase, we may see inflation concerns rise as employers will need to pass those increases into the pricing of their products and services. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.9%.

Medium


Unknown


University of Michigan Consumer Sentiment (Rev)

July's revised University of Michigan Index of Consumer Sentiment will be posted late Friday morning, closing out this week’s calendar. This is another consumer optimism reading about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending that adds fuel to economic growth that makes bonds less appealing to investors. Friday's release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 80.8 the markets will probably shrug off this data.

Overall, the most important day for mortgage rates is Wednesday, but Thursday also has the potential to be it due to the importance of the GDP readings. No day stands out as the calmest. Tomorrow could be that day if stocks open calmly and no big news breaks overnight tonight. Throw in a surprise corporate earnings announcement or two with this week's calendar and we have the makings of a possibly volatile week for the markets and mortgage rates. If still floating an interest rate and closing in the near future, it would be prudent to pay attention to market movement and some of the key events that are scheduled as we may see noticeable moves in rates throughout 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.


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