Rate Lock Advisory

Tuesday, September 17th

Tuesday’s bond market has opened in negative territory following mostly unfavorable economic news. Stocks are showing gains of 155 points in the Dow and 147 points in the Nasdaq. The bond market is currently down 8/32 (3.64%), but gains late yesterday should keep this morning’s mortgage pricing close to Monday’s early rates. If you saw an intraday improvement Monday afternoon, you will likely see an increase this morning of the same size.

8/32

Bonds

30 yr - 3.64%

155

Dow

41,777

147

NASDAQ

17,737

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Neutral

Retail Sales

August’s Retail Sales report kicked-off this week’s economic calendar at 8:30 AM ET. It revealed consumers spent slightly more last month than they did in July (up 0.1%). In what we can consider favorable news is a secondary reading that excludes more costly and volatile auto transactions fell short of expectations. Overall, the report is slightly negative for bonds and mortgage rates, but not enough to fuel a sizable revision in rates.

Medium

Negative

Industrial Production

Today’s second report was August’s Industrial Production data at 9:15 AM ET that showed output at U.S. factories, mines and utilities was much stronger than anticipated. The 0.8% jump in production exceeded expectations of little change from July. This is a sign of strength in the manufacturing sector, meaning we have to label it was bad news for mortgage rates.

Medium

Unknown

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

We also have a 20-year Treasury Bond auction taking place today, raising the possibility of seeing an afternoon revision to mortgage pricing. If the sale was met with a strong demand from investors, particularly international buyers, bond prices may rise and mortgage rates could revise lower after results are announced at 1:00 PM ET. However, if investors shied away from the securities, we may see afternoon pressure in bonds that may cause a slight increase in mortgage pricing before the end of the day.

Low

Unknown

Housing Starts (New Home Construction)

Tomorrow will be an interesting day for the financial and mortgage markets. It starts relatively light with the release of a minor housing report at 8:30 AM ET. August's Housing Starts tracks new home groundbreakings but usually doesn’t have a noticeable impact on rates. It is expected to show an increase in new home starts from July, pointing to strength in the new home portion of the housing sector. Weaker housing data is usually good news for bonds and mortgage rates. We need to see a significant surprise in this data for it to have a noticeable influence on mortgage rates.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Drawing significantly more attention will be the afternoon FOMC meeting adjournment and the related events that will follow. This is where the Fed will likely make their first cut to key short-term interest rates since March 2020. The question isn’t really if they will make a move tomorrow, it is how much of a change they will make. The consensus of a quarter-point reduction is pretty strong, but there are still a few analysts that feel a half-point move is a possibility. If the Fed actually makes half-point cut, we should see bonds rally and mortgage rates move noticeably lower late tomorrow.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Assuming Chairman Powell and friends go with the softer quarter-point cut, traders will be looking at the other events to form an opinion on what the Fed’s future moves will be. Many market participants are expecting a total of .750 in rate cuts before the end of the year. If their first move is .250 tomorrow, it would leave .500 over the remaining two FOMC meetings (November and December). If the revised economic projections that are part of this meeting and what is commonly called the dot-plot show rate cuts totaling more than that amount, the bond market should rally. However, signs that only one more .250 reduction is coming before the end of the year could lead to bond selling and an upward move in mortgage rates.

High

Unknown

Misc Fed

The meeting will adjourn, and their statement will be released at 2:00 PM ET, as will the revised economic projections. Chairman Powell will host a press conference at 2:30 PM ET. Anything other than a quarter point move with confirmation of another at each of the next two meetings should cause a big move in the markets and mortgage pricing tomorrow afternoon.

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.

Oil Region Realty, LLC

Equal Housing OpportunityRealtor MLS
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