Rate Lock Advisory

Monday, March 16th

Monday’s bond market has opened in positive territory to erase Friday’s late sell-off despite early stock gains. Stocks are rallying with bonds, pushing the Dow higher by 575 points and the Nasdaq up 311 points. The bond market is currently up 15/32 (4.21%), which should allow this morning’s mortgage rates to be approximately .125 of a discount point lower than Friday’s early pricing. If you saw an intraday increase late Friday, you should see a noticeable improvement this morning.

15/32

Bonds

30 yr - 4.21%

575

Dow

47,133

311

NASDAQ

22,416

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Neutral

Industrial Production

February's Industrial Production report was released at 9:15 AM ET this morning, revealing a 0.2% increase in output at U.S. factories, mines and utilities. This matched most forecasts and points to modest growth in that part of the manufacturing sector. We are labeling the report neutral for mortgage rates because the bond market had no reaction to the news. Bonds were posting solid gains long before the report was released this morning.

Medium

Positive

Geopolitical/Financial Issues

It appears the bond market, and stocks for that matter, are reacting to optimism that the Strait of Hormuz will be able to reopen to shipping activity soon. This has caused oil prices to retreat from this weekend’s highs, easing inflation concerns for the moment. Accordingly, both stocks and bonds are reacting positively to the news. Again, for the moment. We have seen plenty of afternoon selling in bonds over the past week. So much so that it is almost expected. Therefore, be careful into this afternoon’s trading if looking for an opportunity to lock an interest rate soon.

High

Unknown

None

There is no relevant economic data scheduled to be posted tomorrow. The remainder of the week brings us three more reports in addition to a Treasury auction. However, this week’s big news will be the FOMC meeting that will adjourn Wednesday afternoon. On a similar note, there are many foreign central bank monetary policy decisions scheduled this week also, including from major economies such as the European Central Bank (ECB), Bank of England (BOE) and the Bank of Japan (BOJ). We also have to consider the possibility of Iran/oil related news affecting bond trading and possibly mortgage pricing any day.

Medium

Unknown

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

Tomorrow is when the 20-year Treasury Bond auction is taking place with a 1:00 PM ET results announcement. Good news for mortgage rates would be a strong demand for the securities, indicating investors still have an appetite for long-term debt. On the other hand, weak interest in the securities could cause an upward revision to rates tomorrow afternoon since mortgage rates are based on long-term securities. Last week's related Treasury debt auctions drew mixed results with one being poor and the other above average.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Overall, the most important day for rates is clearly Wednesday due to the morning wholesale inflation data (PPI) and afternoon of FOMC events. The calmest day could be Friday unless some unexpected news hits the wires. We are expecting to have another highly volatile week for the financial and mortgage markets. Therefore, please keep a close on them if still floating an interest rate and closing in the near future.

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.