Rate Lock Advisory

Tuesday, November 25th

Tuesday’s bond market has opened in positive territory to extend overnight gains. Stocks are mixed with the Dow up 191 points and the Nasdaq down 109 points. The bond market is currently up 5/32 (4.00%), testing that key threshold again. This should allow for this morning’s mortgage rates to be approximately .125 of a discount point lower than Monday’s early pricing.

5/32

Bonds

30 yr - 4.00%

191

Dow

46,640

109

NASDAQ

22,762

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Positive

Producer Price Index (PPI)

Beginning today’s batch of economic releases was September’s Producer Price Index (PPI) at 8:30 AM ET that revealed wholesale inflation rose 0.3% that month, pegging expectations. If more volatile food and energy costs are excluded (core PPI), the 0.1% increase was softer than the 0.2% that forecasts predicted. On an annual basis, the overall PPI reading rose 2.7%, as expected, to match August’s revised rate. The core reading rose at a 2.6% annual pace, falling short of the 2.7% rate that was expected and down from August’s updated 2.9% rate. As thought, the age of this data is preventing a more visible reaction. We are labeling the report favorable for bonds and mortgage rates due to the lower core readings, but we haven’t seen bonds move much from their pre-release levels this morning.

High

Positive

Retail Sales

Also posted early this morning was September’s Retail Sales data. It showed consumers spent a little less in September than many had thought. The headline sales number rose 0.2% when analysts were expecting to see a 0.3% increase. A secondary reading that excludes more costly and volatile auto transactions showed no surprise with a 0.3% increase. Weaker than expected sales are generally considered to be favorable for bonds and mortgage rates because that category makes up over two-thirds of the U.S. economy. However, as with the PPI data, bonds have shown just a minor improvement from where they were before this morning’s data was released.

Medium

Positive

Consumer Confidence Index

The Conference Board gave us today’s third release with an announcement that their Consumer Confidence Index (CCI) for November stood at 88.7. This was well below expectations of 93.3 and a large decline from October’s revised 95.5. The lower reading means surveyed consumers felt much better about their own financial and employment situations last month than they do this month. Since waning confidence usually translates into softer consumer spending numbers, we can label this report good news for bonds and mortgage rates.

Medium

Unknown

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

There is also a 5-year Treasury Note auction taking place today that may have a minor impact on bond trading and mortgage pricing this afternoon. If the 1:00 PM ET results announcement indicates there was a strong demand for the securities, we may see bonds strengthen and mortgage rates revise slightly lower before the end of the day. However, a weak demand from investors could have the opposite impact on rates. This scenario repeats tomorrow when 7-year Notes are sold and results are again made available at 1:00 PM.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow brings us three more pieces of data that may affect rates. We will get last week’s unemployment update at 8:30 AM ET instead of the typical Thursday morning release due to the Thanksgiving holiday. It is expected to reveal 225,000 new claims for jobless benefits were made following the previous week’s 220,000. Rising claims are a sign of weakness in the employment sector, so the higher the number the better the news for mortgage rates.

Medium

Unknown

Durable Goods Orders

September's Durable Goods Orders report will also be posted at 8:30 AM ET tomorrow. This is another shutdown-delayed report that helps us measure manufacturing strength by tracking orders for big-ticket items or products such as airplanes, appliances and electronics. This data is known to be quite volatile from month-to-month, so sizable swings from the previous month are fairly normal. Analysts are expecting it to show a 0.3% rise in new orders. A large decline would be considered good news for the bond market and mortgage rates as it would be a sign the manufacturing sector was softer than thought. However, the age of this data may prevent a noticeable reaction to its release.

Medium

Unknown

Fed Beige Book

The final event scheduled next week will be the Federal Reserve's Beige Book release at 2:00 PM ET tomorrow. This report is named simply after the color of its cover but details economic conditions throughout the U.S. by Fed region via their business contacts. Since the Fed uses this information during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, employment and consumer spending. If there is a reaction to the report, it will come during mid-afternoon trading tomorrow.

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... 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.

Ameritrust Mortgage Associates,LLC (NMLS#167664)

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150 East Palmetto Park Road, Suite 800
Boca Raton, Florida 33432
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