Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

Employment Situation

The economic calendar begins early Tuesday morning with the release of two major reports. Likely to draw more attention will be the government’s Employment report that will include November’s data and parts of October that were delayed by the shutdown. Apparently, we won’t ever get October’s unemployment rate due to the shutdown, but should get most of the other payroll numbers for both months. Forecasts have the unemployment rate holding at November’s 4.4% and 40,000 new jobs added to the economy. There also is an expectation from some analysts that September’s 119,000 payroll number may be revised lower in this week’s report and October is going to show a decline in jobs due to a large number of government worker buyouts that were recorded that month.

High

Unknown

Employment Situation

Another headline number that bonds tend to be very sensitive to is average hourly earnings. Rising wages give consumers more money to spend and employers need to raise costs of their products and services to cover the higher wages. This fuels inflation that makes bonds less appealing to investors, leading to increases in bond yields and mortgage rates. Tuesday’s report is expected to show a 0.3% rise in earnings. Favorable news for bonds and mortgage rates will be a smaller payroll number for November, an increase in unemployment and a softer rise in earnings. That scenario would indicate weakness in the employment sector.

High

Unknown

Retail Sales

Tuesday’s second highly important report will be October’s Retail Sales report, also at 8:30 AM ET. This is another shutdown-delayed report that is a bit aged now. November’s update is expected to come sometime next month. Still, it should carry enough weight in the markets to heavily influence rates, especially if the employment data doesn’t show any surprises since consumer spending makes up over two-thirds of the U.S. economy. It is expected to reveal a 0.2% rise in consumer spending. A decline in sales would be very good news for mortgage rates.

Medium

Unknown

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

Wednesday doesn’t have any relevant economic data that we need to be concerned about. However, there are a few of those Fed speeches scheduled and a 20-year Treasury Bond auction that may come into play during afternoon trading. If the 1:00 PM ET results announcement indicates there was a strong demand for the securities, we could see bond strength afterward that causes a slight improvement in rates before the end of the day. On the other hand, a lackluster interest from investors may lead to bond weakness and an upward revision to rates.

High

Unknown

Consumer Price Index (CPI)

Thursday has another highly influential report set for release. It is titled November’s Consumer Price Index (CPI), but as with the Employment report it will include some of October’s data also. The CPI tracks inflationary pressures at the consumer level of the economy. Analysts are expecting to see a 0.3% increase in both the overall reading and also the more important core data that excludes volatile food and energy costs. The annual readings are expected to show inflation ran at a rate above 3.0%, well above the Fed’s preferred 2.0% pace. Rising inflation erodes the value of a bond’s future fixed interest payments, causing bonds to become less appealing to investors. Accordingly, weaker than expected readings would be very good news for mortgage rates.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

The week comes to an end Friday with two moderately important releases. December's revised Index of Consumer Sentiment from the University of Michigan will be announced at 10:00 AM ET Friday. Analysts are expecting a reading of 53.3, unchanged from the initial estimate that was announced earlier this month. Bond traders would prefer to see a large decline, meaning surveyed consumers didn't feel as good about their own financial situations as thought. Waning confidence usually translates into softer consumer spending numbers, restricting economic growth.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

Next up will be Existing Home Sales figures for November at 10:00 AM ET. The National Association of Realtors is expected to announce home resales were little changed from October’s level, signaling the housing sector was flat last month. There are a couple of different housing-related monthly reports, but this one by far gives us the most insight into the sector. Good news for rates would be a large decline in sales because a weakening housing sector makes broader economic growth more difficult and bonds tend to thrive in weaker economic conditions.

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Unknown

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Overall, Tuesday is a strong candidate for most important day for rates because of the strong influence the Employment and Retail Sales reports have. The calmest day may be tomorrow unless a big headline crosses the wires overnight or early tomorrow morning. We are expecting to see plenty of movement in the markets and mortgage rates this week. Therefore, please proceed cautiously if still floating a rate and closing in the near future. Some days may bring multiple changes to pricing.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Employment Situation

Employment Situation

Retail Sales

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

Consumer Price Index (CPI)

Univ of Mich Consumer Sentiment (Rev)

Existing Home Sales from National Assoc of Realtors

none

Float / Lock Recommendation