Rate Lock Advisory

Sunday, November 30th

This week brings us six monthly economic reports that have the potential to affect mortgage rates, one being a highly important report that was delayed by the shutdown. Some of the other delayed reports have either been scratched altogether or will be combined with the current month’s data and released next month. Most of this week’s data is being released by non-governmental organizations or agencies that weren’t impacted by the shutdown, so their reports are current 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

High

Unknown

ISM Index (Institute for Supply Management)

Unlike most Mondays, tomorrow has a very important economic report set for release. The week’s calendar will start with November's Institute for Supply Management's manufacturing index at 10:00 AM ET. This release gives us an indication of manufacturing sector strength by tracking opinions on business conditions from executives in the sector. It is expected to rise a little, meaning slightly more surveyed manufacturing executives felt business improved than did in October. A larger increase would be a sign of economic strength that makes the report bad news for bonds and mortgage rates. Forecasts show a reading of 49.0, up from October's 48.7. Good news for bonds and mortgage rates would be a decline in this index.

Medium

Unknown

ADP Employment

Wednesday is one of the busier days of the week with three reports set for release. First up will be November's ADP private-sector Employment report at 8:15 AM ET. Analysts are expecting it to show 20,000 new private jobs were added to the economy last month, down from October’s 42,000. All employment-related reports usually draw attention in the markets, but this one could cause a more noticeable reaction than it traditionally does due to the limited number of them coming over the past couple months. A smaller number, or better yet a decline in jobs, would be considered good news for the bond market and mortgage rates. It also could sway the Fed to address the softening employment sector by lowering key rates next month than worrying about inflation growth by leaving them unchanged.

Medium

Unknown

Industrial Production

The Fed’s Industrial Production report is set for release at 9:15 AM ET Wednesday. It will give us an indication of manufacturing sector strength by gauging output at U.S. factories, mines and utilities. Forecasts are calling for a 0.1% increase in production, hinting at flat manufacturing activity. Stronger levels of production would be considered bad news for the bond market and mortgage rates, but this report is not expected to greatly influence the markets. The day’s other data is much more likely to drive Wednesday's mortgage rates than this report.

Medium

Unknown

ISM Service Index

Next is November's non-manufacturing index from the Institute for Supply Management (ISM) at 10:00 AM ET Wednesday. This is the sister release to tomorrow's manufacturing index, tracking executive sentiment about business conditions in the services sector instead of manufacturing. It is expected to show a reading of 52.1, down from October's 52.4, signaling fewer surveyed executives felt business improved in the sector than did in October. A lower reading would be favorable news for bonds and mortgage pricing.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Thursday’s only relevant data will be the weekly unemployment update at 8:30 AM ET that is predicted to show 219,000 new claims for jobless benefits were made. This would be an increase from the previous week’s 216,000 initial filings. Declining claims are a sign of strength in the employment sector. Therefore, the larger the number, the better the news for mortgage pricing.

High

Unknown

Personal Income and Outlays

Friday is going to be another busy day for the bond market. It will start with September’s Personal Income and Outlays report that was delayed by the government shutdown. The report tells us about consumer ability to spend (income) and their spending habits (outlays). Both readings are forecasted to rise 0.4%. However, what makes this report so important are the Personal Consumption Expenditures (PCE) indexes in the data. These are the Fed’s preferred inflation indexes, which they rely on to make monetary policy decisions during their FOMC meetings. Forecasts have the overall PCE rising 0.3% and the core PCE up 0.2% for September. Favorable news for rates would be smaller increases in all of the report’s readings. This data is aged, but with so few inflation readings recently, we still should see a change in rates if it reveals any surprises.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

Closing out this week's economic calendar will be the University of Michigan's initial Index of Consumer Sentiment for December at 10:00 AM ET Friday. Analysts are expecting it to be higher than November's final reading, meaning surveyed consumers feel better about their own financial and employment situations now than they did last month. Since stronger sentiment is an indication that consumers are more willing to spend, a lower reading would be considered good news for mortgage rates.

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Unknown

none

Overall, Friday is the most important day of the week because of the influence the PCE indexes carry, but tomorrow’s ISM index is very recent data and is considered to be highly important to the bond market. The calmest day for rates may be Tuesday. We should see noticeable moves in rates multiple days this week, so it would be prudent to maintain contact with your mortgage professional 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.

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