Rate Lock Advisory

Sunday, April 21th

This week is quite busy with five monthly and quarterly economic reports for the markets to digest, two of which are considered to be highly important. In addition to the data, there are two potentially relevant Treasury auctions to deal with. Also worth mentioning is the fact that earnings season is picking up steam, where publicly traded companies announce their quarterly and annual earnings. Earnings generally affect stocks much more than bonds, but what is bad news for stocks is usually considered to be good news for bonds and mortgage 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

Tomorrow doesn’t have anything scheduled that we need to be concerned with. Activities begin late Tuesday morning when March's New Home Sales data is posted. It tells us the number of purchases of newly constructed homes, but only covers the small portion of all home sales in the U.S. that last week's Existing Home Sales did not. This means it will take a wide variance from expectations for it to draw much attention. Analysts are predicting a slight increase in sales.

High


Unknown


Durable Goods Orders

March's Durable Goods Orders will be released early Wednesday that gives us an indication of manufacturing sector strength. This report tracks orders for big-ticket items at U.S. factories. These are products that are expected to last three or more years, such as appliances, electronics and airplanes. Current forecasts show a 2.6% increase in new orders, signaling growth in the manufacturing sector. Weaker manufacturing activity is favorable news for mortgage rates.

Medium


Unknown


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

Wednesday also has one of the week's Treasury auctions scheduled that may affect rates during afternoon trading. 5-year Treasury Notes will be sold Wednesday, followed by 7-year Notes Thursday. If the sales go poorly, we may see broader selling in the bond market that leads to upward revisions in mortgage rates. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds, pushing mortgage pricing lower. Results will be posted at 1:00 PM ET each auction day, so look for any reaction to come during early afternoon hours.

High


Unknown


Gross Domestic Product (GDP)

The most influential economic news of the week will come at 8:30 AM ET Thursday when the preliminary version of the 1st Quarter Gross Domestic Product (GDP) will be released. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measure of economic growth or contraction. Market participants are expecting it to reveal the economy grew at an annual rate of 2.5% during the first three months of this year, slowing from the 3.4% rate of the end of last year. A smaller growth rate would be considered good news for mortgage rates.

Medium


Unknown


Personal Income and Outlays

Friday has two economic reports set for release, starting with Personal Income and Outlays data for March at 8:30 AM ET. It helps us measure consumer ability to spend and current spending habits. This information is important to mortgage rates due to the influence that consumer spending-related data has on the financial markets. If a consumer's income is rising, they have the ability to make additional purchases in the near future, fueling economic growth that raises inflation concerns and has a negative impact on the bond market and mortgage rates. This month's release is expected to show a 0.5% rise in income and 0.6% jump in spending.

High


Unknown


Inflation News

In Friday’s first report is also the Fed's preferred inflation reading (PCE index) that will likely cause a strong reaction in the markets. The overall PCE and core readings are expected to rise 0.3% for the month. Weaker readings should help push mortgage rates lower Friday.

Medium


Unknown


Univ of Mich Consumer Sentiment (Rev)

The week’s calendar closes with the University of Michigan's revised Index of Consumer Sentiment for April at 10:00 AM ET Friday. This report gives us an indication of consumer sentiment and their willingness to spend. Forecasts have the index nearly unchanged from the preliminary 77.9 reading of two weeks ago. This means that surveyed consumers were no more or less optimistic about their own financial situations than they were earlier this month. This data is relevant because waning confidence in their own financial situations usually means consumers are less apt to make a large purchase in the near future. Therefore, the lower the reading, the better the news for rates.

Low


Unknown


Corporate Earnings

Overall, the most active day for rates is likely going to be either Thursday or Friday due to the importance of the economic releases those days. Corporate earnings, which are in full swing this week, can heavily influence stock trading and trickle down to bonds any day. It doesn’t appear there are any weekend geopolitical issues (Iran/Israel) that should affect tomorrow’s trading, but we are watching the situation closely. It would be prudent to keep a close eye on the markets if still floating an interest rate and closing in the near future as we may see multiple days of sizable changes in rates.

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.