Rate Lock Advisory

Sunday, June 28th

This holiday-shortened week has five monthly economic reports set for release, including two that are considered to be highly important. In addition to the data, there is also a public speaking event with the new Fed Chairman midweek. Weekend news that Iran and the U.S. both took military action initially looked to be a problem for tomorrow’s opening in the markets, but news late today that both sides have agreed to stand down should help prevent a big sell-off in bonds tomorrow morning. The week starts light with nothing of importance scheduled for tomorrow, other than a possible reaction to the Iran war news.

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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

Consumer Confidence Index

First up is June's Consumer Confidence Index (CCI) at 10:00 AM ET Tuesday. The CCI comes from the Conference Board (a New York-based business research group) and is fairly important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future. Consumer spending makes up over two-thirds of the U.S. economy, so rising confidence can contribute to overall economic growth. If it shows a sizable increase from last month, we can expect to see a negative reaction in bonds and mortgage rates. Forecasts are predicting a reading of 94.5, up from last month's 93.1. The lower the reading, the better the news it is for bonds and mortgage pricing.

Medium

Unknown

ADP Employment

Wednesday brings us the release of two reports and some Fed talk, starting with June's ADP Employment report at 8:15 AM ET. This report predicts changes in private-sector jobs, using the company's clients that use them for payroll processing as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is known to not be accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week's calendar. It is expected to show approximately 112,000 private sector jobs were added during the month. Bond traders would prefer to see a much smaller number.

Medium

Unknown

Fed Talk

Fed Chairman Warsh will be participating in a discussion at a European Central Bank forum in Portugal Wednesday. The topic of the discussion is related to monetary policy, so we could hear something that the markets find highly relevant and react accordingly. The event is scheduled to start at 9:00 AM ET, meaning we will know if there is a reaction by the time Wednesday’s commentary report is posted.

High

Unknown

ISM Index (Institute for Supply Management)

June's manufacturing index from the Institute of Supply Management (ISM) will be Wednesday’s second release. This index measures manufacturer sentiment by surveying trade executives on current business conditions. May's reading that was posted last month came in at 54.0. Market participants are expecting a reading of 53.8, indicating slightly softer activity in the manufacturing sector. Good news for the bond market and mortgage rates would be a noticeably lower reading. This report carries an elevated importance level and is watched closely, partly because it is the first piece of data that tracks the previous month's activity each month.

High

Unknown

Employment Situation

Thursday has two reports scheduled to close out the week’s calendar, one being extremely influential. June's Employment report will be posted at 8:30 AM ET Thursday instead of the traditional Friday release due to the Independence Day holiday. This highly important release will tell us June's unemployment rate, number of new payrolls added or lost and some earnings figures. These are considered to be extremely important employment sector readings and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, a decline in payrolls and soft earnings that would show a slowing labor market. Weaker than expected readings should help boost bond prices and lower mortgage rates Thursday. However, stronger numbers could be quite detrimental to mortgage pricing. Analysts are expecting to see the unemployment rate hold at May's 4.3% and approximately 112,000 jobs added to the economy last month, while earnings rose 0.3%. A higher unemployment rate, fewer new jobs and a smaller increase in earnings would be considered favorable news for rates.

Medium

Unknown

Factory Orders

The day's other report will come at 10:00 AM ET when May's Factory Orders data will give us an indication of manufacturing strength. It is similar to the Durable Goods Orders report that was released last week but covers both durable and non-durable goods. It usually doesn't have as much of an impact on the bond market as the durable goods data does, meaning there is no reason to believe this report will heavily influence the markets or mortgage pricing. A much smaller than predicted increase would be good news even though it likely will have little impact on the day's rates. The Employment report will take centerstage.

Low

Unknown

Holiday Schedule

Also worth noting is this week's holiday schedule. The bond market will close early Thursday afternoon ahead of Friday's Independence Day holiday and will reopen for regular trading next Monday. Stocks will trade a full day Thursday, but will be closed Friday. The holiday hours sometimes create pressure in the bond market as traders look to protect themselves while U.S. markets are closed for the extended weekend.

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Unknown

none

Overall, the Employment report makes Thursday the best candidate for most active day for rates, but Wednesday may also bring a noticeable change if the ISM index surprises the markets and Fed Chairman Warsh says something unexpected. With several events scheduled that have the potential to move rates noticeably this week, it would be prudent to keep an eye on the markets 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.