Rate Lock Advisory

Sunday, August 7th

This week brings us four pieces of monthly and quarterly economic data, including a couple of highly important inflation releases. In addition to the data, there are also two Treasury auctions set that may influence rates midweek. There is nothing relevant to mortgage rates scheduled for release tomorrow, so look for the stock markets and news of this weekend’s Senate passage of the Inflation Reduction Act to drive trading as the new week starts.

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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

Medium


Unknown


Productivity and Costs (Quarterly)

Activities start Tuesday morning with the release of Employee Productivity and Costs data for the second quarter. It helps us track employee output per hour worked. High levels of productivity are believed to allow the economy to grow with less threat of inflation. Therefore, this is one of the few reports where the stronger headline number is favorable news for rates. Forecasts have productivity falling at a 4.5% annual rate. A much smaller decline in productivity and a noticeably smaller rise in labor costs than 9.3% would be good news for bonds and mortgage rates.

High


Unknown


Consumer Price Index (CPI)

July's Consumer Price Index (CPI) will be posted early Wednesday morning. The CPI is one of the more important reports for the bond market each month, particularly now since it measures inflation at the consumer level of the economy and that is such a hot topic at the moment. Forecasts are showing a 0.2% rise in the overall reading and a 0.5% increase in the more important core data that excludes volatile food and energy prices. The difference is expected to be falling gas prices. Weaker readings should help lead to lower mortgage rates since it would mean inflationary pressures at the consumer level of the economy were softer than thought last month.

Medium


Unknown


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

Wednesday's 10-year Note auction and Thursday's 30-year Bond sale have the potential to affect rates during afternoon trading. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. If the sales are met with a decent demand from investors, indicating that interest in longer-term securities such as mortgage-related bonds is good, the earlier losses are often recovered after the results are announced. Results of the sales will be posted at 1:00 PM ET of each auction day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading those days. However, weak levels of interest could lead to broader selling in the bond market that may push mortgage rates higher.

High


Unknown


Producer Price Index (PPI)

Thursday's monthly economic release will be July's Producer Price Index (PPI). It is the sister release to the CPI but measures inflation at the producer level of the economy. Analysts are predicting an increase of 0.3% in the overall index and a rise of 0.4% in the core reading. Stronger than expected readings would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond's future fixed interest payments. High inflation makes bonds less appealing to investors, leading to falling prices, rising yields and higher mortgage rates.

Medium


Unknown


Univ of Mich Consumer Sentiment (Prelim)

Closing out the week's calendar will be the University of Michigan's Index of Consumer Sentiment for August at 10:00 AM ET Friday. This report will give us an indication of consumer confidence, which projects consumer willingness to spend. If a consumer's confidence in their own financial and employment situation is rising, they are more apt to make large purchases in the near future. But, if they are growing more concerned about their job security or finances, they probably will delay making that large purchase. This influences future consumer spending data and therefore, impacts the financial markets. It is expected to show a minor increase from July's 51.5, meaning confidence was a little stronger this month than last and that surveyed consumers are more likely to make a large purchase. Good news for mortgage rates would be a sizable decline.

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Unknown


None

Overall, Wednesday is the best candidate for most active day for rates due to the importance of the CPI. That said, it is fairly safe to assume that we will have another week with plenty of movement in rates The importance of some of the data make it highly likely rates will again move noticeably this week. Therefore, it would be prudent to watch the markets closely 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... 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.