Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

Producer Price Index (PPI)

Activities are set to begin Tuesday morning when three of the week’s monthly economic reports will be released. First will be September’s Producer Price Index (PPI) at 8:30 AM ET. It will give us some insight into inflationary pressures at the wholesale level of the economy back in September. Analysts are expecting it to show a 0.3% increase in the overall reading and a 0.2% rise in the more important core data that excludes volatile food and energy prices. They are expected to rise slightly on an annual basis. Good news for mortgage rates would be weaker than expected readings that make bonds more attractive to investors and could allow the Fed to make a rate cut next month. Even though this data is aged at this point, a recent announcement that there will be no official October release of this data could offset that reduction in influence.

High

Unknown

Retail Sales

September’s delayed Retail Sales data will also be released early Tuesday morning. This report tracks consumer spending, which makes up over two-thirds of the U.S. economy. Accordingly, it usually draws plenty of attention in the financial and mortgage markets. Forecasts have sales rising 0.3% from August, indicating consumers spent more in September than the previous month. That would be a sign of economic growth. Bond traders and mortgage shoppers prefer to see a smaller increase in sales that would likely lower rates, assuming the PPI doesn’t show a negative surprise.

Medium

Unknown

Consumer Confidence Index

November's Consumer Confidence Index (CCI) will be Tuesday’s third release, coming at 10:00 AM ET. This Conference Board index helps us track consumer confidence in their own financial and employment situations. It is thought that they are more apt to make larger purchases in the near future, fueling economic growth, when confidence is rising. This is important because the consumer spending category makes up such a large portion of the economy and strength in it makes long-term securities such as mortgage-related bonds less attractive to investors. Traders are expecting to see a decline from October's 94.6. A decline indicates surveyed consumers felt better about their finances last month than they do the current month. Good news for rates would be a reading below the predicted 93.3.

Medium

Unknown

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

Also Tuesday is the 5-year Treasury Note auction that will not directly impact mortgage pricing, but can influence general bond market sentiment. If these types of sales go poorly, we often see broader selling in the bond market that leads to upward revisions in mortgage rates. However, strong investor demand usually allows for slight improvements in rates. Results will be announced at 1:00 PM ET, making this an early afternoon event for the mortgage market. This scenario will be repeated Wednesday afternoon when 7-year Notes are sold.

Medium

Unknown

Durable Goods Orders

September's Durable Goods Orders report will be posted at 8:30 AM ET Wednesday. This is another shutdown-delayed report. It helps us measure manufacturing strength by tracking orders for big-ticket items or products that are expected to last three or more years, such as airplanes, appliances and electronics. This data is known to be quite volatile from month-to-month, so sizable swings from the previous month are fairly normal. Analysts are expecting it to show a 0.3% rise in new orders. A large decline would be considered good news for the bond market and mortgage rates as it would be a sign the manufacturing sector was softer than thought. However, the age of this data may prevent a noticeable reaction to its release.

Medium

Unknown

Fed Beige Book

The final event scheduled next week will be the Federal Reserve's Beige Book release at 2:00 PM ET Wednesday. This report is named simply after the color of its cover but details economic conditions throughout the U.S. by Fed region via their business contacts. Since the Fed uses this information during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, employment and consumer spending. If there is a reaction to the report, it will come during mid-afternoon trading Wednesday.

Low

Neutral

Holiday Schedule

The U.S. financial markets will be closed Thursday in observance of the Thanksgiving Day holiday. There will not be an early close Wednesday, but the stock and bond markets will close early Friday and will reopen next Monday morning. Friday will likely be a very light day in bond trading as many market participants will be home for the long weekend. The same can be said to some degree Wednesday afternoon also.

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Unknown

none

Overall, the most important day for rates is Tuesday with the release of three economic reports, two of which are traditionally considered to be highly important even though they are aged now. The calmest day will probably be Friday since many traders will leave Wednesday afternoon and not be back until Monday morning. We are not expecting as much volatility as last week, but the markets can get active without notice. Therefore, it would be prudent to keep an eye on them if still floating an interest rate.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Producer Price Index (PPI)

Retail Sales

Consumer Confidence Index

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

Durable Goods Orders

Fed Beige Book

Holiday Schedule

none

Float / Lock Recommendation