Rate Lock Advisory

Tuesday, December 9th

Tuesday’s bond market has opened in negative territory as the upward trend in bond yields continue. Stocks are mixed with the Dow up 115 points and the Nasdaq down 10 points. The bond market is currently down 2/32 (4.16%), which should cause another .250 of a discount point increase in mortgage rates.

2/32

Bonds

30 yr - 4.16%

115

Dow

47,848

10

NASDAQ

23,535

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium

Unknown

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

There again is little relevant economic data coming today. What will likely be the most influential event on today’s bond trading and mortgage pricing will come this afternoon when results of the 10-year Treasury Note auction are announced at 1:00 PM ET. If investor demand for the securities was strong, we could see afternoon strength in the bond market that may lead to a slight improvement in rates before the end of the day. On the other hand, a lackluster interest that indicates a waning appetite for long-term debt could cause an upward revision to rates. These type of sales are important because mortgage rates are based on long-term securities.

Low

Unknown

Employment Cost Index (Quarterly)

Tomorrow brings us the 3rd Quarter Employment Cost Index (ECI) at 8:30 AM ET. This previously delayed data tracks employer costs for salaries and benefits during the July through September months, giving us an indication of wage inflation pressures. Rapidly rising costs raise wage inflation concerns that spread to other parts of the economy and hurts bond prices. It is expected to show an increase in costs of 0.9%. A smaller than expected increase would be good news for mortgage rates. However, this data is aged at this point, meaning it likely won’t have a significant impact on bond trading or mortgage pricing.

High

Unknown

Federal Open Market Committee (FOMC) Statement

The big news of the week will come from the last FOMC meeting of the year that will adjourn at 2:00 PM ET tomorrow. Analysts are mostly expecting the Fed will cut key short-term interest rates by a quarter-point at this meeting, but the decision is unlikely to be unanimous. Assuming they do in fact make that move, the markets will be looking closer for information about future actions. The lack of data because of the 43-day government shutdown and uncertainty about inflation should cause much debate during their meeting.

High

Unknown

Misc Fed

The Fed will release their post-meeting statement and announce their revised economic projections (including the dot-plot that predicts where key rates will be in the future) at 2:00 PM also. Those will be followed by a press conference with Chairman Powell at 2:30 PM ET. It is quite possible to see large swings in the markets mid and late afternoon tomorrow due to the amount of Fed information we will get and the uncertainty of what will be said about the 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.

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