Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Low

Positive

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

Yesterday’s 20-year Treasury Bond auction went pretty well with the benchmarks indicating a fairly decent demand for the securities, making it good news for rates since it means investors still have an appetite for longer-term debt. Bonds had a slight positive reaction after results were posted at 1:00 PM ET, but not enough to have a positive impact on yesterday afternoon’s mortgage pricing.

Medium

Negative

Existing Home Sales from National Assoc of Realtors

The National Association of Realtors released September's Existing Home Sales report at 10:00 AM ET this morning. They announced a 1.5% increase in home resales. This was the largest increase since February and is being attributed to a decline in mortgage rates over August and September. The increase was in line with expectations, but a strengthening housing sector makes broader economic growth more likely, causing bonds to be less appealing to investors. Therefore, we are labeling the report neutral to slightly negative for rates.

High

Unknown

Government Shutdown

Tomorrow has two pieces of economic data set for release, one of which comes from a governmental agency and is considered highly important to the financial and mortgage markets. September’s Consumer Price Index (CPI) is that release, scheduled for 8:30 AM ET. Some furloughed government employees were recalled back to work to put together this report since it helps determine the Cost of Living Adjustment (COLA) for certain government benefits, such as monthly Social Security payments.

High

Unknown

Consumer Price Index (CPI)

The CPI is extremely influential to the 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 noticeably higher tomorrow morning.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

The second release of the day will be at 10:00 AM ET 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 remaining near 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.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Existing Home Sales from National Assoc of Realtors

Government Shutdown

Consumer Price Index (CPI)

Univ of Mich Consumer Sentiment (Rev)

Float / Lock Recommendation