Rate Lock Advisory

Sunday, July 14th

This week brings us the release of four monthly economic reports for the markets to digest in addition to a couple of other events that may influence rates. Besides the monthly data we will also get the Fed Beige Book and another Treasury auction that could affect afternoon trading one day. One of the economic releases is considered to be extremely important to the financial and mortgage markets.

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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 doesn’t have any relevant economic data, but Fed Chairman Powell has a lunchtime speaking engagement that could cause some movement in the markets. He will be participating in a discussion at the Economic Club of Washington DC. After hearing his two days of congressional testimony last week, it is hard to expect something new to come from this appearance. Still, his words can cause a strong reaction in the markets, so we need to be prepared for movement midday tomorrow.

Medium


Unknown


Domestic Political Issues

If wondering, this weekend’s assassination attempt on former President Trump may have a minor impact on the markets tomorrow, especially since there is no data to drive morning trading. At the time this evening’s update is being posted it looks as if stocks will open with gains and U.S. bonds are often the choice of many investors as a safe haven during geopolitical events such as this. That said, whatever reaction we do get is likely to be short-lived. Tuesday’s economic data has the potential to erase any move we may get tomorrow, regardless of how strong the markets may open tomorrow morning.

High


Unknown


Retail Sales

The first and most important of this week's economic releases will be June's Retail Sales report at 8:30 AM ET Tuesday. This report tracks consumer spending and is expected to show that retail-level sales slipped 0.1% last month. Because consumer spending makes up over two-thirds of the U.S. economy and bonds are more attractive during weaker economic conditions, this data is watched very closely. A larger decline would be good for mortgage rates.

Low


Unknown


Housing Starts (New Home Construction)

Wednesday has four items scheduled throughout the day. First will be June's Housing Starts report at 8:30 AM ET that will give us an indication of housing sector strength and future mortgage credit demand. However, it doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. This month's release is expected to show a small increase in new home groundbreakings. The lower the number of starts, the better the news for the bond market since it would indicate a weaker than expected new home portion of the housing sector.

Medium


Unknown


Industrial Production

June's Industrial Production data will be announced at 9:15 AM ET Wednesday. It measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. Analysts are expecting to see an increase of 0.2% from May's production, signaling the manufacturing sector was modestly stronger last month. This report is far from the most important manufacturing report we get each month, especially when the day has other events scheduled. Good news for rates would be a decline.

Medium


Unknown


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

One of the afternoon events is the 20-year Treasury Bond auction results at 1:00 PM ET. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates Wednesday afternoon. On the other hand, if investor interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher during early afternoon trading.

Medium


Unknown


Fed Beige Book

Also set for release Wednesday afternoon is the Federal Reserve's Beige Book report. This report is named simply after the color of its cover but is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by Fed region throughout the U.S. via the eyes of their business contacts. If there are any significant changes in conditions since the last update, we could see an afternoon move in the markets and mortgage rates after the 2:00 PM ET release. Signs of slowing economic activity or weakening inflation would be favorable news for rates.

Medium


Unknown


Leading Economic Indicators (LEI) from the Conference Board

June's Leading Economic Indicators (LEI) at 10:00 AM ET Thursday is the final report of the week. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. Traders are expecting it to show a 0.3% decline, meaning the indicators are predicting slower economic activity over the next few months. A bigger decline in the index would be good news for the bond and mortgage markets.

Medium


Unknown


Corporate Earnings

Also worth noting is that corporate earnings season kicks into high gear this week. These announcements don't directly impact mortgage rates, but they do heavily influence stocks, which can have an indirect impact on bond trading and mortgage pricing. Generally speaking, bad news for stocks is good news for bonds and rates. If some of the major companies reporting this week announce weaker than expected earnings and/or future earnings projections, stocks should move lower along with mortgage rates.

The most active day for rates will likely be Tuesday due to the importance of the Retail Sales report. No other scheduled events come close to the influence that report can have on rates. Tomorrow may be interesting also as they react to Saturday’s news. The calmest day may be Friday unless something unexpected happens. However, the markets can get active without notice, so it would be prudent to still keep an eye on them if closing in the near future and 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... 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.