Sunday, October 19th
This week brings us the release of much more relevant economic data than the past couple, despite the being government in the third week of its shutdown. In addition to the data there also is a Treasury auction midweek that we will be watching. We are in the Fed’s mandatory quiet period ahead of this month’s FOMC meeting, therefore, we shouldn’t hear anything from members that is related to the economy or monetary policy.
---
Bonds
Market Closed
---
Dow
Market Closed
---
NASDAQ
Market Closed
Trailing 90 Days - National Average
Medium
Unknown
The week's calendar begins late tomorrow morning with the release of September's Leading Economic Indicators (LEI) from the Conference Board, who is a New York-based business research organization and not a governmental agency. This index attempts to predict future economic activity, particularly during the next three to six months. Current forecasts are calling for a decline of 0.3% from August's reading, meaning the indicators are pointing towards weaker economic activity over the next several months. A larger decline would be favorable news for mortgage pricing.
Medium
Unknown
Next on the schedule is Wednesday’s 20-year Treasury Bond auction. If this sale is met with a strong demand from investors, particularly international buyers, bond prices may rise during afternoon trading. This could lead to an improvement in mortgage rates shortly after the results are posted at 1:00 PM ET. On the other hand, a lackluster interest in the securities may create selling in the broader bond market and lead to a slight upward revision to mortgage rates Wednesday afternoon.
Medium
Unknown
September's Existing Home Sales data will be posted at 10:00 AM ET Thursday. This National Association of Realtors release will give us an indication of housing sector strength and mortgage credit demand by tracking home resales. It is currently expected to show an increase in sales. A decline would be good news for the bond market since a slowing housing sector makes broader economic growth less likely and causes bonds to be more appealing to investors.
High
Unknown
We will get an extremely important piece of inflation data Friday morning even though most of the government is still closed. This is because some employees were recalled back to work to put together September’s Consumer Price Index (CPI). While many other governmental reports have been delayed indefinitely during the shutdown, this report has been labeled as a necessity since it helps dictate the Cost of Living Adjustment (COLA) for certain government benefits, such as monthly Social Security payments.
High
Unknown
The CPI is extremely influential to the financial and mortgage markets because it tracks inflation at the consumer level of the economy. Analysts are predicting it will show a 0.4% increase in the September overall reading and a 0.3% rise in the more important core data that excludes more volatile food and energy costs. On an annual basis, the overall CPI is expected to have risen 0.2% to 3.1% while core data held at August's 3.1% annual rate. Weaker readings that indicate inflation is easing would be very good news for bonds and mortgage rates and should allow the Fed to make another rate cut at this month’s FOMC meeting. However, stronger than predicted readings should cause bond yields and mortgage rates to move higher Friday morning.
Medium
Unknown
This week's last report comes at 10:00 AM ET Friday when the University of Michigan updates their Index of Consumer Sentiment for this month. This report is moderately important because it helps us measure consumer confidence in their financial situations and willingness to spend. Current forecasts show this index slipping slightly from its preliminary reading of 55.0 posted two weeks ago. A sizable decline, meaning consumers are likely to spend less in the near future, would be good news for rates.
High
Unknown
Overall, Friday is likely to have the largest change in mortgage rates due to the major inflation data being released. Tuesday is a good candidate for calmest day, unless something unexpected happens. The benchmark 10-year Treasury Note yield tried to break below the 4.00% threshold last week, but failed to do so. This is troublesome for mortgage shoppers because the inability to fall below it makes a trend in the upward direction more likely and mortgage rates tend to track bond yields. This week's trading could help solidify the direction of yields and mortgage rates over the next few weeks, so it would be prudent to keep an eye on the markets if still floating a rate and closing in the near future.
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.