Rate Lock Advisory

Sunday, May 15th

This week brings us the release of five relevant monthly economic reports, one of which is considered to be highly important. There is also a Treasury auction and slew of Fed speeches that may come into play. Tomorrow has nothing of importance scheduled, but we still could see movement in rates due to weekend headlines and concerns about Tuesday’s big economic release.

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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

Activities start Tuesday morning with two economic reports, one being the highly important Retail Sales report for April. This is an extremely relevant report because it measures consumer spending, which makes up over two-thirds of the U.S. economy. Analysts are expecting a 0.9% increase in sales from March to April. A smaller increase should push bond prices higher and mortgage rates lower Tuesday morning as it would be a sign the economy is not as strong as thought. Bad news for rates would be a larger increase in sales.

Medium

Unknown

Industrial Production

Tuesday’s second piece of data will be April's Industrial Production report at 9:15 AM ET. It shows manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are predicting a 0.5% rise in production, indicating that manufacturing activity is strengthening moderately. This report draws some attention but not nearly the same level that the sales data does, meaning the sales report will have a much bigger impact on rates than this one will.

Medium

Unknown

Housing Starts (New Home Construction)

Wednesday has a morning and afternoon event that we will be watching. The morning report is April’s Housing Starts at 8:30 AM ET that gives us an indication of housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show a small decline in new construction starts, hinting at weakness in the new home portion of the housing sector. This report is not considered to be of high importance to the bond market, so it likely will have little impact on mortgage rates regardless of what it reveals.

Medium

Unknown

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

Also Wednesday is a 20-year Treasury Treasury Bond auction with results being announced at 1:00 PM ET. As with the other regular Treasury auctions, a strong demand from investors could lead to lower bond yields and a slight improvement to mortgage pricing Wednesday afternoon. A lackluster interest may lead to an upward change in rates.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

April's Leading Economic Indicators (LEI) is set to be posted at 10:00 AM ET Thursday. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show no change from March's reading, meaning that the indicators are predicting economic activity is likely to stall during the summer months. A decline would be considered good news for bonds and mortgage rates.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

The week’s final report will also come late Thursday morning. April's Existing Home Sales data from the National Association of Realtors tracks home resales in the U.S. The data will give us a measurement of housing sector strength by tracking resales of existing homes in the U.S. Housing data is relevant because a weakening housing sector makes broader economic growth less likely. Current forecasts are calling for a drop in sales last month, pointing at a softening housing sector. Good news for rates would be a large decline in sales.

High

Unknown

Fed Talk

We also have plenty of Fed talk to listen to this week, including from Fed Chairman Powell Tuesday afternoon. He will be speaking at a Wall Street Journal conference and is expected to speak at 2:00 PM ET. There are scheduled speeches from Fed members at various times of the day between Monday and Thursday. Any surprises in them could cause market volatility. The hot topics traders are looking for are thoughts on inflation and the size of the Fed’s future increases to key short-term interest rates to help control it.

Medium

Unknown

Stock Influences

The most important day for rates is Tuesday due to the significance of the Retail Sales report and Chairman Powell speaking publicly. The calmest day may be Friday unless something unexpected happens. It is still corporate earnings season with some big-named retail companies reporting this week. Disappointing results, indicating consumers are spending less, should hurt stocks, boost bonds and lead to lower mortgage rates. There is no reason to believe that this will be a quiet week for rates. Therefore, please keep an eye on the markets if 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.

Hill Valley Financial Services Inc.
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