Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

Durable Goods Orders

May's Durable Goods Orders report at 8:30 AM ET tomorrow will begin this week’s activities. This Commerce Department report will give us an indication of manufacturing sector strength. It tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be quite volatile from month to month, so a moderate variance from expectations is not as meaningful as it is in other reports. Forecasts show a 0.1% increase in May's new orders. A decline, pointing to manufacturing weakness, would be good news for mortgage pricing.

Medium

Unknown

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

Monday also has the first of this week's two Treasury auctions that we will be watching. They both have the potential to affect bond trading enough to alter rates slightly. The key is how strong investor interest is for the securities. 5-year Notes will be sold tomorrow while 7-year Notes go Tuesday. If they are met with a strong demand from investors, we could see bond prices rise and mortgage rates improve slightly during afternoon trading. On the other hand, if the sales draw a lackluster interest from investors, mortgage rates may move slightly higher during afternoon trading these days.

Medium

Unknown

Consumer Confidence Index

Tuesday has the release of June's Consumer Confidence Index (CCI) for us to watch, which is fairly important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, rising confidence can fuel overall economic growth. If it shows a sizable increase in confidence from last month, we can expect to see a negative reaction in bonds and mortgage rates. Forecasts are predicting a reading of 101.0, down from last month's 106.4 reading as consumers grow more cautious about rising inflation. The lower the reading, the better the news it is for bonds and mortgage pricing.

Low

Unknown

GDP Rev 2 (month after Rev 1)

Wednesday will start with the second revision to the 1st Quarter Gross Domestic Product (GDP) reading at 8:30 AM ET. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month's release of the current quarter's initial GDP reading. Last month's first revision showed the economy contracted at a 1.5% annual rate. Wednesday's update is expected to show the same. A large upward revision in the GDP would be considered negative for rates as it means the economy was stronger than thought.

Medium

Unknown

Fed Talk

Also Wednesday morning is a speaking engagement by Fed Chairman Powell. He will be speaking at a European Central Bank forum in Portugal. The event is titled Economic Policy Discussion, meaning we could get a reaction in the markets. This discussion will likely be focused on the global economy, giving traders insight into other central banker’s thoughts about the future. He is expected to speak at 9:00 AM ET, making this a morning event for rates.

Medium

Unknown

Personal Income and Outlays

Personal Income and Outlays data for May is scheduled for release at 8:30 AM ET Thursday. It will give us an indication of consumer ability to spend and current spending activity. The theory is if consumer income is rising, they have more money to spend each month. Analysts are expecting to see a 0.5% rise in income while spending rose 0.5% during the month. This report also includes an important inflation reading that the Fed relies on during their FOMC meetings (PCE). It is expected to show a 0.4% increase in the core PCE Index, indicating inflation is rising. Since rising inflation erodes the value of a bond's future fixed interest payments, unexpected increases in the PCE make bonds less appealing to investors and usually pushes mortgage rates higher.

High

Unknown

ISM Index (Institute for Supply Management)

June's manufacturing index from the Institute of Supply Management (ISM) will close this week’s calendar at 10:00 AM ET Friday. This index measures manufacturer sentiment by surveying trade executives on current business conditions. May's reading that was posted last month came in at 56.1. Market participants are expecting a reading of 55.0, indicating weaker activity in the manufacturing sector. Good news for the bond market and mortgage rates would be a lower reading. This is a very important report and is watched closely, partly because it is the first piece of data that tracks the previous month's activity each month.

Low

Unknown

Holiday Schedule

Also worth noting is the upcoming holiday schedule. The bond market will close early Friday afternoon ahead of Monday's Independence Day holiday closure and will reopen for regular trading next Tuesday morning. Stocks will trade a full day Friday but be closed Monday also. The pre-holiday early close sometimes creates pressure in the bond market as traders look to protect themselves while U.S. markets are closed for the extended weekend.

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Unknown

None

Overall, no day stands out as a clear choice for most important day for rates. The week starts and ends with important economic data that can cause a noticeable move in day to day pricing. Data and other events in between can cause further volatility. We may also see significant swings in the major stock indexes affect bond trading and mortgage pricing (stock gains generally cause bond losses and higher mortgage rates). With so many variables possible this week, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Durable Goods Orders

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

Consumer Confidence Index

GDP Rev 2 (month after Rev 1)

Fed Talk

Personal Income and Outlays

ISM Index (Institute for Supply Management)

Holiday Schedule

None

Float / Lock Recommendation