Rate Lock Advisory

Tuesday, January 21th

Tuesday’s bond market has opened in positive territory despite no relevant economic data to drive trading this morning. Stocks are mixed with the Dow up 229 points and the Nasdaq down 51 points. The bond market is currently up 13/32 (4.57%), but weakness late Friday is going to prevent much of an improvement in today’s mortgage pricing. If you saw an intraday increase late Friday, you should see an improvement of the same size this morning. The U.S. financial markets were closed yesterday for the Martin Luther King Jr. holiday.

13/32

Bonds

30 yr - 4.57%

229

Dow

43,716

51

NASDAQ

19,578

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

Domestic Political Issues

There is nothing of importance scheduled for release today. Bonds appear to be rallying on the fact President Trump did not institute heavy tariffs on his first day in office yesterday. The markets were expecting him to hit several countries right out of the gate. His failure to do so is fueling optimism that he may not be as aggressive with them as previously thought. This creates a bond-friendly environment because the feared tariffs are expected to fuel inflation, making the Fed’s task to bring it down to 2.0% annually much more difficult. We will undoubtedly be hearing plenty on this topic in the coming weeks, but his lack of a move is being taken as a positive for bonds and stocks today.

Medium

Unknown

Domestic Political Issues

The remainder of the week has only three relevant monthly economic reports for the markets to digest, none of which are considered highly important, in addition to one Treasury auction that has the potential to influence rates. We also have to be alert for headlines out of Washington DC that may be of interest to bond and stock traders. Market traders are going to be on edge for the first week or so of the new administration, at least until it is clear no major surprises will be announced.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

Economic activities begin tomorrow with the release of December's Leading Economic Indicators (LEI) at 10:00 AM ET. The Conference Board, who is a New York-based business research group, compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Tomorrow's release is expected to reveal an increase of 0.1%, meaning the indicators are predicting a flat to modest growth in economic activity over the next several months. Weaker economic activity is usually considered good news for mortgage rates.

Medium

Unknown

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

There also is a 20-year Treasury Bond auction taking tomorrow that may come into play late in the day. These auctions show what type of demand investors have for longer-term securities. If demand is strong, particularly from international buyers, we may see the broader bond market improve after results are posted at 1:00 PM ET. On the other hand, lackluster interest in the securities may lead to an upward revision to rates during mid or late afternoon trading.

Low

Unknown

Corporate Earnings

Also worth mentioning is that corporate earnings season gets into full swing this week. There are plenty of big-named public companies announcing their quarterly and annual earnings this week. These generally influence stock trading more than bond trading. However, if the common theme is disappointing results from the bellwether companies, a strong negative reaction in stocks could fuel bond buying that pushes yields lower. This would be good news for mortgage shoppers since mortgage rates tend to track bond yields.

---

Unknown

none

Overall, no day stands out as a good candidate for most important for rates and the same can be said for calmest day. There just aren’t any key events scheduled that are expected to cause a bond rally or sell-off. We will likely see minor changes in rates day to day rather than larger moves unless something completely unexpected happens.

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.