Rate Lock Advisory

Tuesday, November 24th

Tuesday’s bond market has opened in negative territory with stocks rallying again. The Dow is nearing 30,000, currently up 374 points while the Nasdaq has gained 41 points. The bond market is currently down 5/32 (0.87%), but a little strength late yesterday should keep this morning’s mortgage rates close to Monday’s early pricing.

5/32

Bonds

30 yr - 0.87%

374

Dow

29,965

41

NASDAQ

11,922

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Unknown

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

Yesterday’s 5-year Treasury Note auction did not go as well as hoped. The benchmarks showed a below average level of interest in the securities compared to recent sales of the same term. Fortunately, the results did not have an impact on mortgage rates, but it does prevent us from being optimistic about today’s 7-year Note auction. Another lackluster sale could pressure bonds this afternoon and possibly lead to a slight increase in mortgage pricing. Results will be posted at 1:00 PM ET, meaning this is an early afternoon event to watch.

Medium

Neutral

Consumer Confidence Index (Conference Board)

Today’s only relevant economic data was November's Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced a reading of 96.1 that was a decline from October’s revised 101.40, but close to forecasts. The decline indicates that consumers felt less optimistic about their own financial situations than they did last month. Because waning confidence usually translates into softer levels of consumer spending, we should consider the data neutral to slightly positive for mortgage rates.

High

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow is packed with economic releases for the markets to digest. The day begins with the last week’s unemployment figures at 8:30 AM ET. They are expected to show that 735,000 new claims for unemployment benefits were filed last week, down from the previous week’s 742,000. Rising claims is a sign of employment sector weakness. Therefore, the higher the number tomorrow morning, the better the news it is for rates.

High

Unknown

Durable Goods Orders

October's Durable Goods Orders will also be released at 8:30 AM ET. This data helps us measure manufacturing strength by tracking orders for big-ticket items or products that are expected to last three or more years, such as airplanes, appliances and electronics. It is known to be quite volatile from month-to-month, so sizable swings from the previous month are fairly normal. It is expected to show a 0.9% rise in new orders. A smaller than expected increase would be considered good news for the bond market and mortgage rates as it would indicate the manufacturing sector was not as strong as thought. We need to see a sizable variance from forecasts though for the markets to have a noticeable reaction due to the usual volatility in the data.

Medium

Unknown

GDP Rev 1 (month after initial)

Also early tomorrow morning will be the release of the first revision to the 3rd Quarter Gross Domestic Product (GDP). It is expected to show no change from last month's preliminary estimate of a 33.1% annual rate of growth. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the benchmark measurement of economic growth. Good news for rates would be a downward revision, meaning the economy was not as strong as previously thought. However, this data is somewhat aged at this point covering the July, August and September months. That means it will take a noticeable revision to cause a move in rates.

Medium

Unknown

Personal Income and Outlays

October's Personal Income and Outlays data is also set for release tomorrow morning. This data measures consumers' ability to spend and their current spending habits. It also includes an inflation reading (PCE index) that the Fed relies on when making their monetary policy decisions. Because consumer spending is such a large part of the U.S. economy and controlling inflation is a key part of the Fed's responsibilities, data such as this can influence the markets and mortgage rates. The bond market tends to thrive in weaker economic conditions, so good news for mortgage rates would be softer than expected readings. Current forecasts are calling for a no change the income reading while spending rose 0.3%.

Low

Unknown

New Home Sales

The week’s least important report is October’s New Home Sales data at 10:00 AM ET. It will give us an indication of housing sector strength. Analysts are expecting to see an increase between September and October's sales of newly constructed homes. It will take a large change in sales for this data to influence mortgage rates, partly because this report tracks such a small portion of all home sales. Last week's Existing Home Sales report covers most of the home sales in the U.S.

Medium

Unknown

University of Michigan Consumer Sentiment (Rev)

Concluding the week’s economic releases will be the revised University of Michigan Index of Consumer Sentiment for November at 10:00 AM. Current forecasts are calling for little change from the 77.0 preliminary reading two weeks ago, meaning surveyed consumers felt nearly the same about their own financial and employment situations as they did earlier in the month. Bond traders would prefer to see a decline because waning confidence usually means consumers are less likely to make a large purchase in the near future, restricting economic growth. As long as we don't see a large upward move, the report will likely have a minimal impact on rates.

Medium

Unknown

Federal Open Market Committee (FOMC) Minutes

The final event of the week will be the release of the minutes from the last FOMC meeting during afternoon trading. Traders will be looking for any indication of the Fed's next move regarding monetary policy from discussion of the participating members. The minutes will show what economic concerns members have about the pandemic, lack of another stimulus package and what the near future holds. They will be released at 2:00 PM ET, therefore, any reaction will come during mid-afternoon trading. These minutes may lead to afternoon volatility, or they may be a non-factor. Because they do carry the potential to influence mortgage rates, they should be watched.

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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