Rate Lock Advisory

Sunday, December 10th

This week brings us the release of only four monthly economic reports that may affect mortgage rates, but three of them are considered to be of high importance and extremely influential. In addition to the data, we also have a couple of Treasury auctions to deal with during the early days and the last FOMC meeting of the year midweek that is likely to create afternoon volatility.

---

Bonds

Market Closed

---

Dow

Market Closed

---

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

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

It begins with no relevant economic data scheduled tomorrow, but we do have the first of this week's two Treasury auctions taking place. 10-year Treasury Notes will be sold tomorrow, followed by 30-year Bonds Tuesday. Results of both will be posted at 1:00 PM ET each day, making them early afternoon events. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements in mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to rates.

High

Unknown

Consumer Price Index (CPI)

November's Consumer Price Index (CPI) will start this week's economic releases at 8:30 AM ET Tuesday. This is an extremely influential release that tracks inflation at the consumer level of the economy. There are two readings of the index that are widely used- the overall reading and the core data reading. If they are announced stronger than expected, indicating that inflationary pressures are not retreating as quickly as thought, the bond market should react negatively. That would drive mortgage rates higher. If we see weaker than expected numbers, the bond market should respond by pushing mortgage rates noticeably lower. Forecasts are calling for a 0.1% increase in the overall reading and a 0.3% rise in the core data that excludes volatile food and energy costs.

High

Unknown

Producer Price Index (PPI)

Wednesday will be interesting with November's Producer Price Index (PPI) starting the day at 8:30 AM ET. This very important release tracks inflationary pressures at the producer or manufacturing level of the economy. The overall reading is predicted to rise 0.1% while the core data likely rose 0.2%. As with the CPI, weaker readings would be good news for bonds and mortgage pricing.

High

Unknown

Federal Open Market Committee (FOMC) Statement

The last FOMC meeting of the year will adjourn Wednesday afternoon. There is a wide consensus that Chairman Powell and friends will leave key short-term interest rates unchanged at this time. Recent economic data has altered theories on what the Fed’s next move will be. Just a few months ago the markets were expecting one more rate hike to keep inflation in a downward trend. Now, many analysts believe the Fed’s next move will be a rate cut instead of a move higher, meaning the debate is when they will make the first reduction.

High

Unknown

Fed Talk

At the same time their post-meeting statement is made at 2:00 PM ET, they will also release revised economic projections. Those will be followed by a press conference with Chairman Powell at 2:30 PM ET. We can expect discussion about if/when rate cuts may start to prevent the economy from sliding into a recession and how many moves will be made next year as the driving force in the markets Wednesday afternoon. Generally speaking, if the Fed throws cold water on the idea of potential rate cuts anytime soon, we should see bonds tank and mortgage rates spike higher. Good news would be more definitive discussion on the topic that raises optimism that rate cuts are coming soon.

High

Unknown

Retail Sales

The third big economic report of the week will be November's Retail Sales report at 8:30 AM ET Thursday that will give us insight into consumer spending. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising spending raises the possibility of seeing solid economic growth and stronger inflation. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, an unexpected increase in sales will likely drive bond prices lower and mortgage rates higher. Analysts are expecting to see a 0.1% decline in November's sales, meaning consumers spent a little less last month than in October. Favorable results for mortgage rates would be a larger decline that shows weaker than thought economic activity.

Medium

Unknown

Industrial Production

Friday’s sole economic report will be the release of November's Industrial Production at 9:15 AM ET. This moderately important report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts show a 0.2% rise in output. A decline will be good news for bonds and mortgage rates, while a stronger reading would show manufacturing strength and be considered unfavorable.

---

Unknown

none

Overall, the FOMC events along with an inflation reading make Wednesday the most important day for rates, but Tuesday’s CPI release can also fuel a great deal of volatility in the markets. The calmest day may be Friday even though we will still likely see a change in rates that day also. There is little doubt this will be a very active week for the financial and mortgage markets. Accordingly, please proceed cautiously if 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... 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.

Diamante Mortgage

Equal Housing Lender
Portions Copyright © 2023 Pipeline ROI, LLC
Another website by Pipeline ROI