Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Negative

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

Yesterday’s 20-year Treasury Bond auction did not go well. The benchmarks we used to gauge investor demand pointed to a weak interest in the securities. They indicated demand was well below the average of other recent sales. Even though we didn’t see much of a reaction in the bond market despite the lackluster interest, the sale still has to be labeled unfavorable for mortgage rates.

Medium

Neutral

FOMC Meeting Minutes

Also posted yesterday afternoon were the minutes from last month's FOMC meeting. They gave us some interesting bits of relevant information. Under the good news column was discussion about how AI and other technological advances may improve worker productivity and contribute to lower inflation. However, they also showed there was discussion from several members about the possibility of needing to boost key short-term interest rates if inflation doesn’t head back down to the Fed’s goal of 2.0% annually. The fact that a rate hike may be coming before another cut surprised many analysts. That said, we likely saw little reaction to the minutes because data posted after the FOMC meeting did indeed signal inflation was easing. That lowers the chance of the Fed making the referenced rate hike, assuming incoming data continues to support the downward trend.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

Today’s first piece of data was last week’s unemployment numbers. They revealed only 206,000 new claims for jobless benefits were made, down from the previous week’s upwardly revised 229,000. Forecasts had claims coming in at 225,000. The drop in initial filings is a sign of strength in the employment sector, causing us to label the report bad news for rates.

Medium

Positive

Leading Economic Indicators (LEI) from the Conference Board

The Conference Board announced at 10:00 AM ET that their Leading Economic Indicators for December fell 0.2%. The index attempts to predict economic activity over the next several months. The decline for December means the index is predicting modestly slower growth in economic activity during the first part of the new year. Predictions had it slipping just 0.1%, so we can consider the report to be slightly favorable for bonds and mortgage pricing. Unfortunately, the weekly claims data is offsetting this report, keeping mortgage rates unchanged.

High

Unknown

Gross Domestic Product (GDP)

Tomorrow has four economic reports scheduled, two of which are considered to be major releases that can heavily influence the financial and mortgage markets. We will get the initial Gross Domestic Product (GDP) reading from the 4th Quarter at 8:30 AM ET. This reading is so important because, as the total sum of all goods and services produced in the US, it is considered to be the best measurement of economic activity. Analysts are expecting it to show the economy grew at an annual rate of 2.9% during the final three months of the year, a slower pace than the 3rd quarter's 4.4% rate. A noticeably weaker economy would be great news for the bond and mortgage markets. However, a larger than expected growth rate, indicating the economy was stronger than thought, will probably fuel bond selling and lead to higher rates tomorrow.

High

Unknown

Personal Income and Outlays

The second highly important report also comes at 8:30 AM ET. December's Personal Income and Outlays data gives us an indication of consumer ability to spend and current spending habits, making it relevant to the bond market and mortgage rates. Analysts are predicting an increase in income of 0.3%, signaling consumers had a little more money to spend in December than they did in November. The spending reading is expected to rise 0.4%. Stronger readings would be good news for the stock markets and could hurt bond prices, driving mortgage rates higher. But what makes this report so influential is the fact it includes the Personal Consumption Expenditures (PCE) indexes. Forecasts vary between a 0.2% and 0.3% monthly rise in both the overall and core readings. Weaker than expected numbers would be considered favorable news for the bond market and mortgage rates, especially if the core PCE fails to reach monthly or annual projections.

Low

Unknown

New Home Sales

The final two reports of the week will be released at 10:00 AM ET tomorrow. A combination of November and December's New Home Sales report is one. This is the least important report of the week, covering the small portion of home sales that last week’s Existing Home Sales report did not include. Because several other reports are being released tomorrow that have a much higher importance level, this report will likely have little or no impact on mortgage rates.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

February's revised reading to the University of Michigan's Index of Consumer Sentiment will close out this week’s economic calendar. This index gives us an indication of consumer willingness to spend and usually has a moderate impact on the financial markets because consumer spending is such a large part of the U.S. economy. It is expected to show a small decline from the initial 57.3 reading two weeks ago. Good news for rates would be a large decline in this reading, meaning consumers are more concerned about their finances and are less likely to make a large purchase in the immediate future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

FOMC Meeting Minutes

Weekly Unemployment Claims (every Thursday)

Leading Economic Indicators (LEI) from the Conference Board

Gross Domestic Product (GDP)

Personal Income and Outlays

New Home Sales

Univ of Mich Consumer Sentiment (Rev)

Float / Lock Recommendation