This holiday-shortened week brings us the release of only three economic reports that are expected to influence mortgage rates, but two of them are considered to be highly important. There are also a couple of Treasury auctions that may affect rates during afternoon trading midweek and a batch of Fed speeches that have the potential to move pricing multiple days. There is nothing of importance scheduled for tomorrow and the bond market will be closed Wednesday for the Veteran’s Day holiday even though stocks will trade a full day. --- Bonds Market Closed --- Dow Market Closed --- NASDAQ Market Closed
Indexes Affecting Rate Lock HighUnknownConsumer Price Index (CPI)Activities will start early Tuesday morning with the release of the highly important October Consumer Price Index (CPI). The CPI measures inflationary pressures at the consumer level of the economy and is one of the most important reports the bond market sees each month. Rising inflation erodes the value of a bond's future fixed interest payments, making them less appealing to investors today, causing yields and mortgage rates to move higher. It also forces the Fed to be more aggressive with monetary policy during their FOMC meetings. Analysts are expecting to see a 0.3% increase in the overall reading and a 0.2% rise in the core data. The core reading is the more important of the two because it excludes more volatile food and energy prices. Good news for rates would be smaller than expected increases. MediumUnknownFed TalkThere are a large number of Fed speeches and similar events this week. Multiple days have more than one speech scheduled that opens the opportunity for the markets to react to their words. Of particular interest is Tuesday when there are three speeches scheduled that have a topic listed as Economic Outlook (4:00 AM ET, 3:30 PM ET and 6:30 PM ET). Bond traders will be listening to them for any hint of future Fed moves, especially if a rate hike may be coming at next month’s FOMC meeting. The rest of the scheduled speaking events are likely to be non-factors for rates. MediumUnknownTreasury Auctions (5,7,10,20,30 year)Tuesday also has the first of this week’s two relevant Treasury auctions. Results of the day's 10-year Treasury Note sale will be announced at 1:00 PM ET, giving us an idea of investor appetite for long-term securities. This is relevant to rates because they 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. MediumUnknownExisting Home Sales from National Assoc of RealtorsNext up will be the release of October's Existing Home Sales report at 10:00 AM ET Thursday. The National Association of Realtors is expected to announce a small decline in home resales, meaning the housing sector softened slightly last month. That would be relatively good news for the bond market and mortgage pricing because a stronger housing sector makes broader economic growth more likely and bonds tend to thrive in weaker economic conditions. But unless it shows a significant surprise, this data will likely not have a major impact on Thursday's rates. HighUnknownProducer Price Index (PPI)October's Producer Price Index (PPI), the sister release of Tuesday's CPI, will close out this week’s calendar early Friday morning. It measures inflation at the wholesale level of the economy and carries slightly less significance than the CPI. Weaker readings than the predicted 0.4% rise in the overall and 0.3% increase in the core data would be favorable news for bonds and mortgage rates. As with all inflation data, weaker readings would be good news for bonds and mortgage rates. ---UnknownnoneOverall, Tuesday is the most important day for rates because of the importance consumer inflation data carries, followed by the 10-year Treasury Note auction results. The calmest day may be Thursday unless a big move in stocks influences bond trading. The light number of scheduled economic reports doesn’t mean mortgage rates will remain flat this week. It is highly likely we will have another active week for rates, so it would be prudent to keep an eye on them if closing in the near future and 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... 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.
