Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Low

Unknown

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

Tomorrow has an afternoon event that has the potential to have a modest impact on bond trading though. Results of the day’s 5-year Treasury Note auction will be announced at 1:00 PM ET. Good news would be the benchmarks showing a strong demand for the securities. However, this week’s auctions are both for short-term debt and won’t have the same impact on rates that sales of long-term debt do because mortgage pricing is based on long-term securities. Any reaction to the results should come during early afternoon hours tomorrow and/or Tuesday (7-year Notes), but it should be minor.

Medium

Unknown

Consumer Confidence Index

Economic releases begin late Tuesday morning with the release of April's Consumer Confidence Index (CCI). The CCI is considered to be an indicator of future spending by consumers. The Conference Board surveys 5,000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security or income, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because consumer spending makes up over two-thirds of the U.S. economy and a potential slowdown would help to restrict economic growth. Forecasts show a decline in confidence from March's 91.8. The smaller the reading, the better it is for mortgage pricing.

High

Unknown

Durable Goods Orders

There are two pieces of data set for release early Wednesday morning. First up is March's Durable Goods Orders that gives us an indication of manufacturing sector strength. This report tracks orders for big-ticket items at U.S. factories for products that are expected to last three or more years, such as appliances, electronics and airplanes. Current forecasts show a 0.5% increase in new orders, signaling a rebound in the manufacturing sector after February’s orders fell 1.4%. Weaker manufacturing activity is favorable news for mortgage rates. It is worth noting that this data is known to be volatile from month to month, so a small variance from expectations won't affect the markets like it would coming in many other reports.

Also early Wednesday will be the release of February and March Housing Starts reports. This shutdown-delayed data tracks groundbreakings of new home construction and gives us a hint of housing sector strength. The report is expected to show a decline in new starts, pointing to a bit of weakness in the new home portion of the housing sector. Good news for rates would be a sizable decline, but this data doesn't draw a high level of interest. It will take a large variance from forecasts to have an impact on mortgage pricing.

High

Unknown

Federal Open Market Committee (FOMC) Statement

This week's FOMC meeting will adjourn Wednesday afternoon at 2:00 PM ET. The overwhelming consensus is that Chairman Powell and friends will leave key short-term interest rates at their current levels to see how higher oil prices will affect inflation over the longer period. Their post-meeting statement will be released when it adjourns, which will be followed by what will likely be Chairman Powell’s final FOMC press conference. This meeting does not include revised economic projections.

Medium

Unknown

Employment Cost Index (Quarterly)

Thursday has three economic reports scheduled for release, all at 8:30 AM ET. Two of those are considered to be major pieces of data that can heavily influence the financial markets and mortgage rates. First up is the 1st Quarter Employment Cost Index (ECI). This index tracks employer costs for wages and benefits, giving us a measurement of wage-inflation. A large increase in costs means employers will need to pass those increases into the pricing of their products and services. A smaller increase than the 0.8% rise that market analysts are predicting would be good news.

High

Unknown

Gross Domestic Product (GDP)

One of the major releases will be the highly influential initial Gross Domestic Product (GDP) reading for the 1st quarter. The GDP is considered to be the benchmark indicator of economic growth or contraction since it is the total sum of all goods and services produced in the U.S. Market participants are expecting it to reveal the economy grew at an annual rate of 2.1% during the first three months of this year, strengthening from the 0.5% rate of the end of last year. A smaller growth rate would make bonds more appealing to investors and be considered good news for mortgage rates.

High

Unknown

Personal Income and Outlays

The other key report is March's Personal Income and Outlays data. It helps us measure consumer ability to spend and current spending habits. This information is important to mortgage rates due to the influence that consumer spending-related data has on the financial markets. If a consumer's income is rising, they have the ability to make additional purchases in the near future, fueling economic growth that raises inflation concerns and has a negative impact on the bond market and mortgage rates. Thursday's release is expected to show a 0.3% rise in income and a 0.9% jump in spending. Favorable results for rates would be smaller increases.

More importantly are the Personal Consumption Expenditures (PCE) indexes in the day’s third report. These are the Fed's preferred inflation readings, so they draw a lot of attention. The overall PCE reading is predicted to be up 0.7% from February due to Iran-related higher fuel and energy costs while the more watched core PCE that excludes those volatile costs is expected to rise 0.3% for the month. Good news for mortgage pricing would be weaker numbers, especially in PCE readings.

High

Unknown

ISM Index (Institute for Supply Management)

The Institute for Supply Management (ISM) will close out this week’s economic calendar when they post their manufacturing index for April at 10:00 AM ET Friday. This highly important report gives us insight into manufacturer sentiment on business conditions. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. Analysts are expecting to see a reading of 53.0, up from March's 52.7. Bond traders would prefer to see a larger decline from March's level, which would signal the manufacturing sector was weaker than thought during the month.

Low

Unknown

Corporate Earnings

Also worth mentioning is that corporate earnings season picks up momentum this week, where publicly traded companies announce their earnings results and forward guidance. Generally speaking, bad news for stocks often leads to bond gains and lower mortgage rates. They are scheduled throughout the week, mostly before the markets open or after they close. This means we can see influence on bond trading multiple days. It will be interesting to see how these companies handle their forward guidance, particularly how AI will affect tech jobs and how high oil costs are impacting others. Weaker than expected earnings could lead to stock selling, causing investors to shift funds into bonds.

Overall, Wednesday is in the conversation for most important day because of the FOMC meeting, but there is a real chance that we will see the biggest move in rates Thursday after the GDP and inflation reports are posted. No day stands out as a good candidate for calmest since there is at least one item listed each day of the week and several days have multiple events. If still floating an interest rate and closing in the near future, it would be prudent to keep a close eye on the markets because we are expecting to see plenty of movement in rates.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Consumer Confidence Index

Durable Goods Orders

Federal Open Market Committee (FOMC) Statement

Employment Cost Index (Quarterly)

Gross Domestic Product (GDP)

Personal Income and Outlays

ISM Index (Institute for Supply Management)

Corporate Earnings

Float / Lock Recommendation