Rate Lock Advisory

Sunday, May 26th

This holiday-shortened week brings us the release of four relevant monthly and quarterly economic reports for the markets to digest, in addition to a few more Fed speaking engagements before their required two-week quiet period ahead of next month’s FOMC meeting. A couple of Treasury auctions are also worth noting, but likely won’t heavily influence rates. The financial and mortgage markets will be closed tomorrow in observance of the Memorial Day holiday and will reopen for regular trading Tuesday morning. Accordingly, we will not be updating this report tomorrow.

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Bonds


Market Closed

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Dow


Market Closed

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NASDAQ


Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium


Unknown


Consumer Confidence Index

Starting this week's scheduled activities is the Conference Board, who will announce their Consumer Confidence Index (CCI) for May at 10:00 AM Tuesday. This data measures consumer willingness to spend. If the index rises, it indicates that surveyed consumers felt better about their own personal financial and employment situations than they did last month and therefore, are more apt to make large purchases in the near future. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending is such a big portion of the U.S. economy and bonds tend to thrive in weaker economic conditions. Tuesday’s release is expected to come in at 96.0, down from April's 97.0.

Low


Unknown


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

Tuesday also has an afternoon event that we will be watching. There is a 5-year Treasury Note auction happening Tuesday, followed by 7-year Notes Wednesday. Neither of them will directly impact mortgage pricing, although they can influence general bond market sentiment. If the sales go poorly, we could see a little selling in the bond market that leads to a slight upward revision to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing additional funds into the market and pushing mortgage pricing lower. Look for any reaction to come shortly after the results are announced at 1:00 PM ET Tuesday and/or Wednesday.

Medium


Unknown


Fed Beige Book

Wednesday morning doesn't have any relevant economic data that we need to be concerned with. There is an afternoon event that may influence rates later in the day though. That is the 2:00 PM ET release of the Federal Reserve's Beige Book. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. via business contacts in each Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If there is a reaction in the bond market or mortgage pricing, it will happen during mid-afternoon hours Wednesday.

Medium


Unknown


GDP Rev 1 (month after initial)

The first revision to the 1st quarter Gross Domestic Product (GDP) reading will be posted early Thursday morning. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. Last month's preliminary reading revealed that the economy grew at an annual rate of 1.6%. Analysts expect to see a downward revision, meaning the economy was slower than previously estimated during the first three months of the year. If the revision comes in stronger than the last estimate, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was doing better than thought. Since bonds tend to thrive in weaker economic conditions, a downward revision would be good news for mortgage rates.

Medium


Unknown


Personal Income and Outlays

April's Personal Income and Outlays data is set for release at 8:30 AM ET Friday. This report gives us an indication of consumer ability to spend and current spending habits. A decline in income means that consumers have less money available to spend. Since consumer spending makes up over two-thirds of our economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts show a 0.3% increase in the income reading while spending rose 0.4%. More importantly, this report also has the core PCE index in it that the Fed relies heavily on as a gauge of inflation. Weaker numbers would be considered good news for bonds and mortgage rates, but the overall and core PCE readings will draw much more attention than the income and spending numbers. The monthly and annual PCE readings will drive Friday’s bond trading and mortgage pricing.

High


Unknown


Inflation News

Overall, Friday is a good candidate for the most important day for rates due to the potential influence of the PCE indexes within the Personal Income and Outlays report. The calmest day may be Wednesday, especially during morning trading. It would be prudent to keep a close eye on the markets if still floating an interest rate and closing in the near future as there is the possibility of volatility this week.

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Holiday Schedule

We would like to take this opportunity to wish everyone a safe and wonderful Memorial Day holiday and ask to please take a moment to remember those who made the ultimate sacrifice for our nation.

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... Float 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.


Garden Realty

76 Gallup Lane
Waterford, CT 06385