Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Unknown

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

Yesterday’s 10-year Treasury Note auction went fairly well with the benchmarks indicating a decent demand from investors. As expected, bonds showed little reaction despite the favorable results announcement. Interest in the securities wasn’t overly strong, preventing traders from waiting for tomorrow’s key inflation data before reacting. In addition, bonds had already weakened from morning levels as traders grew more concerned about what that data will show. This scenario will be repeated tomorrow when 30-year Bonds are sold.

Medium

Neutral

FOMC Meeting Minutes

Also released yesterday afternoon were the minutes from last month’s FOMC meeting. They didn’t give us any huge surprises, but did highlight some debate or disagreement amongst Fed members about the size of their first rate cut since March of 2020. Most felt the half-point cut was appropriate while some said a quart-point move would suffice. As we now know, they eventually settled on the half-point reduction. Almost all members felt inflation was on track to reach the Fed’s preferred annual rate of 2.0%. In short, there wasn’t much in the minutes that we should be concerned or excited about. Accordingly, we saw little reaction to the 2:00 PM ET release.

High

Negative

Consumer Price Index (CPI)

Today’s big news was the release of September’s Consumer Price Index (CPI). It revealed inflationary pressures at the consumer level of the economy were hotter than expected, both monthly and annually. The overall CPI for September rose 0.2% while the core data that excludes more volatile food and energy costs increased 0.3%. Both readings were 0.1% higher than expectations. The year over year readings weren’t of much help either with the overall rising 2.4% instead of the predicted 2.3%. Core data was up annually at a 3.3% pace when it was forecasted to come in at 3.2%. To summarize, there wasn’t anything in this report that we can label good news for bonds and mortgage rates.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

Fortunately, this morning’s second release did give us favorable results that were enough of a surprise to prevent a sizable sell-off in bonds. Last week’s unemployment update showed new claims for benefits jumped to 258,000 from the previous week’s 225,000. Forecasts had initial filings at 228,000. While this headline number is a sign of weakness in the labor market and good news for bonds, the spike in claims is being attributed to Hurricane Helena and the strike at Boeing. Still, we are seeing bonds buoyed by the news, helping to prevent a larger increase in this morning’s mortgage rates.

High

Unknown

Producer Price Index (PPI)

Tomorrow has two more economic reports that may have an impact on mortgage rates. First will be September’s Producer Price Index (PPI) at 8:30 AM ET. It is considered to be the sister release of today’s CPI, giving us an indication of inflationary pressures at the wholesale level of the economy instead of the consumer level. We usually see a reaction to any surprises in this data, but consumer inflation news generally has a larger impact on mortgage rates. Forecasts have the overall PPI rising 0.1% last month with the core reading up 0.2%.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

This week’s economic calendar ends with the University of Michigan posting their Index of Consumer Sentiment for October at 10:00 AM ET tomorrow. It will give us an indication of consumer confidence, which helps us measure consumer willingness to spend. If a consumer is more confident in their own financial situations, they are more apt to make large purchases in the near future. On the other hand, if they are growing more concerned about their job security or finances, they probably will delay making that large purchase. This influences future consumer spending data and, therefore, can impact the financial markets. It is expected to show a reading of 70.3, meaning confidence was a bit stronger than September's 70.1. A decline would be considered favorable news for bonds and mortgage rates because waning consumer spending usually translates into slower economic growth.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

FOMC Meeting Minutes

Consumer Price Index (CPI)

Weekly Unemployment Claims (every Thursday)

Producer Price Index (PPI)

Univ of Mich Consumer Sentiment (Prelim)

Float / Lock Recommendation