Rate Lock Advisory

Sunday, June 16th

This holiday-shortened week has five monthly economic reports for the markets to digest, one being labeled highly important. There are also a few non-data items on the calendar that have the potential to influence mortgage rates, including a Treasury auction and some Fed-member speeches. Tomorrow is the only trading day of the week that does not have at least one relevant economic report set for release. Most of the remaining days have multiple events scheduled.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High


Unknown


Retail Sales

Relevant activities begin early Tuesday morning when May's Retail Sales report is posted. It will give us some important insight into consumer spending habits. Since consumer spending makes up over two-thirds of the U.S. economy, the markets pay close attention to this data. Analysts are expecting to see a 0.3% rise in sales and a 0.2% increase if more costly and volatile auto transactions are excluded. Good news for bonds and mortgage rates would be weaker spending numbers.

Medium


Unknown


Industrial Production

Tuesday morning also brings us May's Industrial Production data at 9:15 AM ET that will be a measure of manufacturing strength by tracking output at U.S. factories, mines and utilities. This report is considered to be only moderately important to mortgage rates and should require a sizable variance from forecasts for it to influence mortgage rates. Expectations are for a 0.4% increase from April's production. A decline would be favorable news for mortgage pricing, but the sales data will draw much more attention than this report will.

Medium


Unknown


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

We also have a 20-year Treasury Bond auction taking place Tuesday. Results will be posted at 1:00 PM ET, making this an early afternoon event. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates. Both of last week’s auctions drew decent interest from investors, leaving us optimistic that this week’s sale may follow suit. However, if this week’s sale does not go as well as those did, we could see bonds weaken and mortgage rates move higher Tuesday afternoon.

Low


Neutral


Holiday Schedule

With the financial markets closed Wednesday for the Juneteenth Holiday, most of the lenders that are open for business will likely use Tuesday’s afternoon rates or may opt to delay rate locks until Thursday’s pricing comes out. Since there will be no economic news releases and the markets are closed, we will not be posting a Wednesday morning update to this report.

Low


Unknown


Housing Starts (New Home Construction)

Thursday’s sole monthly release will be May's Housing Starts report at 8:30 AM ET. It tracks groundbreakings of new home projects. This is not considered to be as important as other housing reports and usually has a minimal impact on mortgage rates. Market analysts are expecting to see an increase in new home construction starts last month. Good news for the bond market and mortgage rates would be a noticeable decline in groundbreakings.

Medium


Unknown


Existing Home Sales from National Assoc of Realtors

Both of Friday's economic releases will be posted at 10:00 AM ET. One is May's Existing Home Sales data from the National Association of Realtors. This release tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are currently expecting to see a modest decline in sales. As with most economic reports we get, weaker than expected numbers would be favorable to mortgage rates.

Medium


Unknown


Leading Economic Indicators (LEI) from the Conference Board

The last report of the week will be May's Leading Economic Indicators (LEI). The LEI is a Conference Board release that attempts to predict economic activity over the next several months. Since it comes from a business research group and not a governmental agency, its impact on rates is often minimal. Current forecasts show a 0.3% decline in the indicators. A larger decline would be good news for the bond and mortgage markets.

Medium


Unknown


Fed Talk

In addition to the above referenced data, we also have a couple of Fed-member speaking engagements that we will be attentive to throughout the week. Now that the FOMC meeting is behind us and the preceding two-week quiet period has expired, we will start hearing individual opinions on different topics. Some of the subject matter is very relevant to the markets and mortgage rates, while others are not. The one speech that stands out in this week’s calendar is happening Tuesday afternoon and has a topic of Economic Outlook and Monetary Policy. If it affects rates, it will do so during afternoon trading.

Medium


Unknown


General Bond Trends

Overall, Tuesday is the most important day of the week for rates due to the influence the sales data can have on the markets, followed by the afternoon events that can cause further movement. The calmest day will probably be Thursday unless something unexpected happens. Bonds staged a nice rally last week that drove yields and mortgage rates lower. Favorable results from this week’s data has the potential to drive them even lower. On the other hand, stronger results may push them back to where they were at the end of last month. Accordingly, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

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.