Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Negative

Federal Open Market Committee (FOMC) Statement

What was of interest was comments in the post-meeting statement and during Chairman Powell’s press conference that indicated the Fed was nearing the time to start reducing the amount of their monthly bond purchases (tapering). While that is a negative for bonds and mortgage rates since the Fed is a significant buyer in the market right now, traders knew tapering was coming sooner than later. Surprisingly though, bonds have reacted positively after this afternoon’s events.

Low

Positive

None

Stocks are still mixed with the Dow down 88 points and the Nasdaq up 116 points. The bond market has improved from this morning’s level, currently down only 2/32 (1.25%). This is enough of a move for some lenders to slightly improve mortgage pricing, but most are likely to wait until tomorrow’s economic data before reflecting this change.

Low

Neutral

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

There was no economic data posted this morning. Yesterday’s 5-year Treasury Note auction was uneventful. The benchmarks showed an average level of interest in the securities compared to other recent sales. Bonds had little reaction to the 1:00 PM ET results, preventing the sale from affecting mortgage pricing. We will repeat this process tomorrow when 7-year Notes are sold.

High

Unknown

Gross Domestic Product (GDP)

Tomorrow 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 bonds and rates since it would mean the economy was stronger than thought.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Also early tomorrow morning will be the release of last week’s unemployment figures. They are expected to show that 380,000 new claims for unemployment benefits were filed last week, down from the previous week’s 419,000. Declining claims from week to week indicate a strengthening employment sector. Accordingly, good news for bonds and mortgage rates will be a higher number. bond market is currently down 6/32 (1.25%), but we still should see little change in this morning’s mortgage rates.

Rate Lock Advisory