Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Unknown

Fed Talk

There is nothing of importance scheduled for release this morning. This morning’s losses may be a mix of further digesting Friday’s Employment report and traders preparing for this week’s quite eventful calendar. Friday’s report may have altered some Fed member’s thought process regarding monetary policy next year. We saw some gains in bonds late in the day that allowed a few lenders to improve rates slightly, but this morning’s weak open pretty much erased them.

Medium

Unknown

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

We do have a 10-year Treasury Note auction taking place today that may come into play this afternoon. Results of the sale will be announced at 1:00 PM ET. If there is a reaction in the bond market, it will come during early afternoon trading. A strong sale, meaning a high demand for the securities, could lead to afternoon strength in bonds and possibly a slight improvement in rates. On the other hand, a lackluster interest in the auction could lead to an upward revision in rates before the end of the day. This scenario will be repeated tomorrow when 30-year Bonds are sold.

High

Unknown

None

The rest of the week brings us the release of only four monthly economic reports that may affect mortgage rates, but three of them are considered to be of high importance and extremely influential. In addition to the data, we also have a 30-year Treasury bond auction and the last FOMC meeting of the year for the markets to watch.

High

Unknown

Consumer Price Index (CPI)

November's Consumer Price Index (CPI) is one of those highly important economic reports coming this week. It will be posted at 8:30 AM ET tomorrow. This is an extremely influential release that tracks inflation at the consumer level of the economy. There are two readings of the index that are widely used- the overall reading and the core data reading. If they are announced stronger than expected, indicating that inflationary pressures are not retreating as quickly as thought, the bond market should react negatively. That would drive mortgage rates higher. If we see weaker than expected numbers, the bond market should respond by pushing mortgage rates noticeably lower. Forecasts are calling for a 0.1% increase in the overall reading and a 0.3% rise in the core data that excludes volatile food and energy costs.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Overall, another inflation reading, FOMC meeting, revised Fed economic projections and press conference make Wednesday the most important day for rates, but Tuesday’s CPI release can also fuel a great deal of volatility in the markets. The calmest day may be Friday even though we will still likely see a change in rates that day also. There is little doubt this will be a very active week for the financial and mortgage markets. Accordingly, please proceed cautiously if still floating an interest rate.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Fed Talk

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

None

Consumer Price Index (CPI)

Federal Open Market Committee (FOMC) Statement

Float / Lock Recommendation