Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

None

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

Consumer Price Index (CPI)

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

Fed Talk

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

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

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.

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Unknown

none

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.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

None

Consumer Price Index (CPI)

Fed Talk

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

none

Float / Lock Recommendation