Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Negative

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

Yesterday’s 10-year Treasury Note auction drew a relatively weak demand from investors. This didn’t come as a big surprise considering the hotter than expected inflation data posted earlier in the day. Rising inflation makes bonds less appealing to investors since it erodes the value of their future fixed interest payments. We didn’t see a strong reaction to the 1:00 PM ET results announcement, but that was likely because bonds were already in a heavy sell-off after the consumer inflation data was released. The soft demand from investors forces us to label the auction bad news for rates since it indicates investor appetite for long-term securities may be waning and mortgage pricing is based on long-term debt.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow morning brings us the release of two moderately important economic reports, starting with last week’s unemployment figures at 8:30 AM ET. They are expected to show 195,000 initial claims for jobless benefits were made, up from the previous week’s unexpectedly low 189,000 new filings. Declining claims are a sign of strength in the employment sector, so the higher the number tomorrow, the better the news for mortgage rates.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

Next up will be the release of October's Existing Home Sales report at 10:00 AM ET. The National Association of Realtors is expected to announce a small decline in home resales, meaning the housing sector softened slightly last month. That would be relatively good news for the bond market and mortgage pricing because a stronger housing sector makes broader economic growth more likely and bonds tend to thrive in weaker economic conditions. But unless it shows a significant surprise, this data will likely not have a major impact on tomorrow’s mortgage rates.

Medium

Unknown

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

We also have the second relevant Treasury auction of the week taking place tomorrow. This time it will be 30-year Treasury Bonds being sold with results available at 1:00 PM ET. Good news for the broader bond market and mortgage rates would be a strong demand from investors. However, results of yesterday’s 10-year Note sale leaves us more pessimistic than optimistic that this auction will go well. If there is a reaction, it will affect rates during early afternoon trading.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Weekly Unemployment Claims (every Thursday)

Existing Home Sales from National Assoc of Realtors

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

Float / Lock Recommendation