Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Low

Positive

Geopolitical/Financial Issues

As expected, President Trump’s speech this morning was more political than financial with little coming from it that is relevant to the bond market or mortgage rates. One notable comment is that the U.S. won’t use military force to acquire Greenland, tapping down rhetoric over the past week. He still maintained the U.S. needs control of the island but at least for now, a military invasion seems unlikely. The markets were looking to open in positive ground prior to his speech, so we can’t say this morning’s gains are a direct result of it- especially without the added tariff situation resolved. However, it certainly isn’t hurting them either.

Medium

Unknown

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

There is also a 20-year Treasury Bond auction taking place today that will give us an indication of investor demand 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 before the end of the day.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow brings us a weekly, monthly and quarterly economic report. First will be the weekly unemployment numbers at 8:30 AM ET that are expected to show 208,000 new claims for jobless benefits were filed after the previous week had 198,000 new claims. Good news for rates would be a much higher number because rising claims are a sign of weakness in the employment sector.

Low

Unknown

GDP Rev 1 (month after initial)

The revised 3rd Quarter Gross Domestic Product (GDP) reading will also be posted early tomorrow morning. The GDP measures the total of all goods and services produced in the U.S., making it the benchmark measurement of economic growth. Last month's delayed preliminary estimate of a 4.3% annual rate of growth surprised many since forecasts had that estimate at 3.2%. Most analysts are expecting the revised reading to match the 4.3% that was announced last month. Technically, a downward revision would signal slower than thought economic growth, which would be favorable for bonds. However, since this data is old now (July through September) and comes on the same morning as a major report, it likely will have no impact on mortgage rates regardless of what it shows.

High

Unknown

Personal Income and Outlays

Tomorrow’s most influential data will be the Personal Income and Outlays report that will give us an indication of consumer ability to spend and their current spending habits. This is a combination of October and November’s data since both were delayed by the government shutdown. While the income and spending readings are moderately influential, it is the Personal Consumption Expenditures (PCE) indexes in the data that elevate the importance of the report. These are the Fed’s preferred inflation readings, so they are relied upon heavily during the Fed’s monetary policy decisions. The bond market tends to thrive in weaker economic conditions, so good news for mortgage rates would be softer than expected readings, particularly in the PCE readings. Current forecasts show a 0.4% increase in income and a 0.5% rise in spending. Analysts are also expecting the overall and core PCE readings to both have increased 0.2% and annual readings to have risen slightly.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Geopolitical/Financial Issues

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

Weekly Unemployment Claims (every Thursday)

GDP Rev 1 (month after initial)

Personal Income and Outlays

Float / Lock Recommendation