Opinion on when to Lock your loan

Indexes Affecting Rate Lock

Medium

Negative

Domestic Political Issues

The week begins tomorrow with nothing of importance scheduled. Weekend rumors out of Washington DC that the Senate may be getting close to a deal to reopen the government is likely to influence the markets tomorrow. At this moment, stocks look like they want to open with gains tomorrow while bonds appear to be weaker than Friday’s close. This could lead to an increase in rates tomorrow morning. Stronger than expected inflation news out of China may also contribute to tomorrow’s bond weakness and higher mortgage rates tomorrow.

Medium

Unknown

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

Scheduled activities begin Wednesday afternoon when results of the day’s 10-year Treasury Note auction will be announced at 1:00 PM ET. This auction will give us an idea of investor appetite for long-term securities, which is relevant because mortgage rates are based on long-term debt. A strong sale, meaning investor demand was high, will be good news for the broader bond market and the future direction of mortgage pricing. Of particular interest is bidding from international buyers. We often see a bit of weakness right before these sales as investors prepare for them, but that is a very short-term issue that usually gets corrected after results are announced, assuming there was a decent demand for the securities. This scenario will be repeated Thursday when 30-year Bonds are sold.

Medium

Neutral

Government Shutdown

Among this week’s delayed economic releases is the highly important Consumer Price Index (CPI) for October that gives us inflation readings at the consumer level of the economy. September’s CPI data was released last month despite the shutdown because it was deemed a necessity since it helps dictate the annual Cost of Living Adjustment (COLA) for social security recipients. That was an exception that was not extended to October’s report.

Low

Unknown

Fed Talk

There are a large number of Fed-member speaking events this week. Several days have multiple events scheduled that open the opportunity for the markets to react to their words if there are any big surprises. None of them look to have topics that are likely to draw a reaction in the markets. However, with so little scheduled for the week it won’t take much for the markets to react.

Medium

Negative

General Bond Trends

Also worth noting is the fact that the benchmark 10-year Treasury Note yield broke back above the important threshold of 4.0% last week and did so with some conviction. That is a concerning sign for the direction of mortgage rates. There doesn’t seem to be enough scheduled this week to bring it back below that level. In other words, we don’t have high expectations that rates will drop noticeably lower this week.

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Unknown

none

Overall, Wednesday is the best candidate for most important day for rates even though we likely won’t see a big move until afternoon trading. The calmest day may be Friday unless something unexpected happens. There are some weeks that we go into expecting to see a great deal of volatility in the financial and mortgage markets. This is not one of them. That said, it would still be prudent to keep an eye on the markets if still floating an interest rate and closing soon because they can get active with little or no notice.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Domestic Political Issues

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

Government Shutdown

Fed Talk

General Bond Trends

none

Float / Lock Recommendation