Rate Lock Advisory

Monday, June 16th

Monday’s bond market has opened in negative territory following plenty of geopolitical headlines and early stock strength. The major stock indexes are posting sizable gains with the Dow up 439 points and the Nasdaq up 262 points. The bond market is currently down 3/32 (4.41%), which should cause this morning’s mortgage rates to be approximately .125 of a discount point higher than Friday’s early pricing.

3/32

Bonds

30 yr - 4.41%

439

Dow

42,637

262

NASDAQ

19,669

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Low

Negative

Geopolitical/Financial Issues

There is no relevant economic data set for release this morning. Bonds are likely reacting to weekend headlines from the Iran / Israel conflict that caused oil prices to move higher and this morning’s news that Europe is rumored to have offered the U.S. a flat 10% tariff to all goods imported from the EU to settle their trade war. It is still a bit surprising that we have not seen the traditional flight to safety that bonds generally attract during times of international conflict, where funds are shifted into U.S. Treasuries, leading to lower yields. This is especially true after the conflict between Iran and Israel escalated over the weekend.

Medium

Unknown

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

Even though there is no economic data to drive trading this morning, we do have a 20-year Treasury Bond auction taking place that may affect bonds and mortgage pricing this afternoon. If the 1:00 PM ET results announcement indicates there was a strong demand from investors, particularly international buyers, we should see bond prices move higher, leading to lower yields and a possible improvement in mortgage rates before the end of the day. On the other hand, a lackluster interest in the securities may cause an upward revision to rates later today. Both of last week’s auctions went well, leaving us optimistic about today’s sale.

High

Unknown

None

The remainder of this holiday-shortened week has four monthly economic reports for the markets to digest, with one being labeled highly important. There is also an afternoon of FOMC events Wednesday that have the potential to create significant volatility in the markets and mortgage pricing. We will also be watching headlines from the Middle East and oil prices as they also may cause movement in the markets and news from this week’s G7 summit in Canada.

High

Unknown

Retail Sales

Tomorrow brings us the release of May's Retail Sales report at 8:30 AM ET. This report is considered to be highly important to the financial and mortgage markets because it tracks consumer spending and that category makes up over two-thirds of the U.S. economy. Analysts are expecting to see a 0.6% decline in sales and a 0.2% increase if more costly and volatile auto transactions are excluded. Good news for bonds and mortgage rates would be weaker spending numbers since softer consumer spending restricts economic growth.

Medium

Unknown

Industrial Production

May's Industrial Production data will be posted tomorrow at 9:15 AM ET. It measures output at U.S. factories, mines and utilities, giving us a sign of manufacturing sector strength or weakness. This report is considered to be only moderately important to mortgage rates and should require a sizable variance from forecasts for it to influence mortgage rates. Expectations are for a 0.1% increase from April's production. A decline would be favorable news for mortgage pricing, but the sales data will draw much more attention than this report will.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Overall, Wednesday is the most important day for rates by default due to the potential the FOMC meeting adjournment and other related events may have on the markets. The Retail Sales report means we could see a noticeable move in rates tomorrow also. The calmest day could be Friday, assuming something unexpected doesn’t happen. It would be prudent to keep an eye on the markets if still floating an interest and closing in the near future, especially the middle days of the week.

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.

Amity Mortgage LLC

Your friends in the mortgage business.

185 Meadow St
Naugatuck, CT 06770
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