Monday, November 9th
Monday’s bond market has opened flat with little news and no data to drive trading. Stocks are posting strong gains to start the week, pushing the Dow higher by 808 points and the Nasdaq up 566 points. The bond market is currently unchanged from Friday’s close (4.86%), but some weakness during afternoon trading should cause a slight increase in this morning’s mortgage rates if compared to Friday’s early pricing.
0/32
Bonds
30 yr - 4.86%
808
Dow
52,094
566
NASDAQ
25,145
Trailing 90 Days - National Average
High
Unknown
There is nothing scheduled today that is expected to have an impact on mortgage rates. The rest of this holiday-shortened week has only three monthly reports set for release, but two of them qualify as major releases. In addition to the data, there are also a couple of Treasury auctions scheduled and a batch of individual Fed-member speeches that we will be watching. The bond market will be closed Wednesday for the Veteran’s Day holiday even though stocks will trade that day.
High
Unknown
October’s Consumer Price Index (CPI) will start this week’s activities at 8:30 AM ET tomorrow. The CPI measures inflationary pressures at the consumer level of the economy and is one of the most important reports the bond market sees each month. Rising inflation erodes the value of a bond's future fixed interest payments, making them less appealing to investors today, causing them to be sold at a discount. This pushes yields and mortgage rates higher. It also forces the Fed to be more aggressive with monetary policy during their FOMC meetings. Analysts are expecting to see a 0.3% increase in the overall reading and a 0.2% rise in the core data. The core reading is the more important of the two because it excludes more volatile food and energy prices. Good news for rates would be smaller than expected increases.
Medium
Unknown
There are a large number of Fed speeches and similar events this week. Multiple days have more than one speech scheduled, opening the opportunity for the markets to react to their words. Of particular interest are tomorrow’s three speeches that all have a topic listed as Economic Outlook (4:00 AM ET, 3:30 PM ET and 6:30 PM ET). Bond traders will be listening to them for any hint of future Fed moves, especially if a rate hike may be coming at next month’s FOMC meeting. The rest of the scheduled speaking events are likely to be non-factors for rates.
Medium
Unknown
Tomorrow also has the 10-year Treasury Note auction, giving us an idea of investor appetite for long-term securities. This is relevant to rates because they are based on long-term debt. A strong sale, meaning investor demand was high, will be good news for the broader bond market and the future direction of mortgage pricing. We often see a bit of weakness right before these sales as investors prepare for them, but that is a very short-term issue that usually gets corrected after results are announced, assuming there was a decent demand for the securities. Results will be posted at 1:00 PM ET, making this an early afternoon event for rates.
---
Unknown
Overall, tomorrow is the most important day for rates because of the importance consumer inflation data carries, followed by the 10-year Treasury Note auction results. The calmest day may be Thursday unless a big move in stocks or unexpected headlines influences bond trading. The small number of scheduled economic reports doesn’t mean mortgage rates will remain flat this week. It is highly likely we will have another active week for rates, so it would be prudent to keep an eye on the markets if closing in the near future and still floating an interest rate.
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.