Rate Lock Advisory

Sunday, April 27th

This week brings us eight monthly or quarterly economic reports that may affect mortgage rates with four of them carrying high importance in the markets. The week starts light with nothing of importance scheduled for tomorrow, the only day without at least one item. There is a strong possibility of seeing significant movement in rates multiple days, particularly Wednesday through Friday.

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Bonds

Market Closed

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Dow

Market Closed

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NASDAQ

Market Closed

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium

Unknown

Consumer Confidence Index

Activities 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 the potential slowdown in spending would help to restrict economic growth. Forecasts show another decline in confidence from March's 92.9. The smaller the reading, the better it is for mortgage pricing.

Medium

Unknown

ADP Employment

Wednesday's schedule starts with the ADP Employment report at 8:15 AM ET. It tracks changes in private-sector jobs, using ADP's clients that use them for payroll processing as a base. While it does draw attention, it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we do often see a reaction to the report, we should be watching it. Analysts are expecting it to show that approximately 128,000 private sector payrolls were added to the economy last month. A smaller number would be good news for rates.

High

Unknown

Gross Domestic Product (GDP)

There are multiple reports set for release at 8:30 AM ET Wednesday, one being 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 0.4% during the first three months of this year, slowing from the 2.4% 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.

Medium

Unknown

Employment Cost Index (Quarterly)

Also at 8:30 AM ET is the release of 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. This is bad news for bonds and mortgage rates. A smaller increase than the 0.9% rise that market analysts are predicting would be good news.

High

Unknown

Personal Income and Outlays

Another major release Wednesday morning is March’s Personal Income and Outlays report. 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. Wednesday's release is expected to show a 0.4% rise in income and a 0.5% increase in spending as consumers made purchases before tariffs took effect.

More importantly are the Personal Consumption Expenditures (PCE) indexes in this report. These are the Fed’s preferred inflation readings, so they draw a lot of attention. The overall PCE reading is predicted to be unchanged from February while the more watched core PCE is expected to rise 0.1% for the month. Both are expected to fall 0.3% from February on a year-over-year basis. Good news for mortgage pricing would be weaker numbers, especially the annual PCE readings.

High

Unknown

ISM Index (Institute for Supply Management)

The Institute for Supply Management (ISM) will post their manufacturing index for April at 10:00 AM ET Thursday. This highly important report gives us insight into manufacturer sentiment on business conditions. A reading below 50 means that more surveyed trade executives felt business worsened during the month than those who felt it had improved. Analysts are expecting to see a reading of 47.9, down from March's 49.0. Bond traders would prefer to see a larger decline from March's level, which would signal the manufacturing sector weakened more than thought during the month.

High

Unknown

Employment Situation

We will get more key economic data early Friday morning. April's Employment report is set to be posted at 8:30 AM ET, revealing the U.S. unemployment rate, the number of jobs added to the economy during the month and earnings data. This is an extremely influential report for the financial and mortgage markets. It is expected to show that the unemployment rate held at 4.2% and that approximately 130,000 jobs were added during the month, while earnings rose 0.3%. A higher unemployment rate and a much smaller increase in the payroll and earnings numbers would be good news for bonds and rates because they would indicate weaker than thought conditions in the employment sector of the economy. Stronger than expected results will probably lead to bond selling, possibly causing a sizable increase in mortgage pricing Friday.

Medium

Unknown

Factory Orders

March's Factory Orders report will close out this week’s economic calendar at 10:00 AM ET Friday morning. This data is similar to the Durable Goods Orders report that was posted last week, except it includes orders for both durable and non-durable goods. It will also give us a measurement of manufacturing sector strength but is considered to be only moderately important to the bond and mortgage markets. That is partly because a big portion of the data was already released with the Durable Goods Orders report, meaning it will likely have a minimal impact on Friday's mortgage rates. It is predicted to show a 3.4% jump in orders as businesses tried to get ahead of tariffs.

Low

Unknown

Corporate Earnings

The next FOMC meeting is set for May 6-7th, so we should see limited Fed-member influence on trading this week due to their mandatory quiet period ahead of meetings. Corporate earnings season is still going strong with more big-named companies reporting earnings this week. They include companies such as Apple, Amazon and Microsoft to name a few. Generally speaking, good news for stocks is bad news for bonds and mortgage pricing. That isn’t always the case as we have seen them move in the same direction during the tariff volatility earlier this month, but the norm is they move in opposite directions.

Overall, take your pick for the most important day for rates. Wednesday has four reports scheduled, including two highly important reports. Thursday’s sole monthly release is also considered to be a major report and the almighty monthly Employment report Friday is always a safe bet to draw a strong reaction in the markets. The calmest day may be tomorrow unless there is an unexpected headline overnight. It would be prudent to keep a close eye on the markets if still floating an interest rate and closing in the near future because they should be active a good part of the week.

Float / Lock Recommendation

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.


Kelly Fouch

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