Rate Lock Advisory

Monday, June 14th

Monday’s bond market has opened in negative territory despite the lack of a clear driving force. Stocks are mixed with the Dow down 133 points and the Nasdaq up 50 points. The bond market is currently down 9/32 (1.48%), which should push this morning’s mortgage rates higher by approximately .250- .375 of a discount point.

9/32


Bonds


30 yr - 1.48%

133


Dow


34,345

40


NASDAQ


14,110

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low


Neutral


None

There is nothing of importance scheduled for today. The rest of the week has five relevant monthly economic reports in addition to a couple of other events scheduled that are likely to affect mortgage rates. The other events include a Treasury auction tomorrow and an afternoon of Fed events Wednesday.

High


Unknown


Retail Sales

The week's activities start early tomorrow morning when the Commerce Department posts May's Retail Sales data at 8:30 AM ET. This report gives us a very important measurement of consumer spending, which makes up over two-thirds of the U.S. economy. Analysts are expecting to see that retail sales fell 0.4%. The larger the decline from April, the better the news it is for bonds and mortgage rates. On the other hand, if we see stronger sales, we should expect bond weakness and an increase in rates tomorrow morning.

High


Unknown


Producer Price Index (PPI)

Also at 8:30 AM ET tomorrow will be the release of May’s Producer Price Index (PPI). It tracks inflationary pressures at the producer level of the economy. Last week’s release of the Consumer Price Index (CPI) showed much stronger than expected inflation at the consumer level. The CPI is more important than the PPI, but tomorrow’s release can also cause a fair amount of movement in inflation-sensitive bonds and possibly mortgage rates. Analysts are expecting to see a 0.5% rise in both the overall and more important core readings. Weaker numbers would be good news for rates.

Medium


Unknown


Industrial Production and Capacity Utilization

The final economic release tomorrow will be May's Industrial Production data at 9:15 AM ET. It will give us an indication of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. However, this report is considered to be only moderately important to mortgage rates. It is expected to show a 0.6% increase from April's production. A smaller rise, or a decline, would be favorable to bonds and mortgage pricing.

Medium


Unknown


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

We also have a 20-year Treasury bond auction taking place tomorrow. Results will be posted at 1:00 PM ET, making this an early afternoon event. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates. However, if the interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher during afternoon trading.

High


Unknown


Federal Open Market Committee (FOMC) Statement

Overall, the FOMC events make Wednesday the most important day of the week by default, but tomorrow should also be very active for the financial markets and mortgage pricing due to the economic data. The calmest day may be Friday. We should see the most movement in rates midweek. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets, ready to lock, since we could see a big move one direction or the other this 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... 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.