Rate Lock Advisory

Thursday, August 25th

Thursday’s bond market has opened slightly in negative territory following stronger than expected economic data. The stock markets are flat despite the favorable economic news with the Dow up 7 points and the Nasdaq unchanged. The bond market is currently down 3/32 (1.57%), which should again keep this morning’s mortgage rates very close to Wednesday’s morning pricing.

3/32


Bonds


30 yr - 1.57%

7


Dow


18,488

0


NASDAQ


5,217

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 (5,7,10,30 year securities)

Yesterday’s 5-year Treasury Note auction went very well in terms of investor demand for the securities. Unfortunately, we did not see much a reaction once results were posted at 1:00 PM ET. It does allow us to be optimistic about today’s 7-year Note sale though. Results of it will also be posted at 1:00 PM ET today, so any reaction will come during early afternoon trading. If investor interest is again strong, there is a possibility of seeing bonds improve this afternoon, possibly enough to slightly improve mortgage pricing.

High


Negative


Durable Goods Orders

July's Durable Goods Orders was the more important of today’s two economic releases. This Commerce Department announced an increase of 4.4% in new orders for big-ticket products. That was stronger than the 3.5% rise that was expected. Even a secondary reading that excludes orders for more volatile and costly transportation-related items (such a new airplanes) exceeded forecasts (+1.5% vs +0.4%). Those increases indicate that the manufacturing sector was stronger than many had thought last month, making the data bad news for bonds and mortgage shoppers.

Low


Negative


Weekly Unemployment Claims (every Thursday)

The second piece of data was last week’s unemployment figures, also at 8:30 AM ET. They showed that 261,000 new claims for unemployment benefits were filed last week, down slightly from the previous week’s 262,000 initial filings. Analysts were calling for 265,000 initial claims, so the 261,000 is considered bad news for bonds as declining claims is a sign of a strengthening employment sector. Fortunately though, this is only a weekly snapshot so it has had little influence on this morning’s mortgage rates.

Medium


Unknown


Misc Fed

Also worth noting is that today is the start of the annual central banker conference in Jackson Hole, Wyoming. There have been major events to come out of this event in the past while others have been non-factors. Federal Reserve Chair Janet Yellen is scheduled to speak this year, so all eyes will be on her speech at 10:00 AM tomorrow. The conference runs Thursday through Saturday, so we could still see the markets react to something from this event. Of particular interest would be talk of inflation and future Fed rate hikes.

Medium


Unknown


GDP Rev 1 (month after initial)

Tomorrow has two economic reports set for release, starting with the first revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. This reading is the second of three that we see each quarter. Last month's preliminary reading revealed that the economy grew at an annual rate of 1.2%. Tomorrow’s revision is expected to show that the GDP actually rose 1.1%, meaning the economy was a bit weaker than previously thought from April through June. A smaller than expected reading should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. There will be a final revision issued next month, but it probably will have little impact on mortgage rates since traders will be more interested in the current quarter's activity.

Medium


Unknown


University of Michigan Consumer Sentiment (Rev)

The second report of the morning will be the University of Michigan's revised Index of Consumer Sentiment for August. This sentiment index helps us track consumer willingness to spend. It is expected to show a slight increase from August's preliminary reading of 90.4. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future. The lower the reading we get, the better the news it is for mortgage shoppers.

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.