Rate Lock Advisory

Sunday, November 1st

This week has seven monthly and quarterly economic reports scheduled that may influence mortgage rates, some of which are considered to be highly important. We will also be watching for corporate earnings/stock movement to have an impact on bond trading again this week and individual Fed member speeches could play a role also if they reveal any big surprises. Election results should be known by Wednesday morning, but we aren’t expecting a strong reaction to them in the markets either way.

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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

High

Unknown

ISM Index (Institute for Supply Management)

Activities will begin late tomorrow morning when October's manufacturing index from the Institute for Supply Management (ISM) is released. This is part of the traditional new month batch of reports of higher importance that are usually posted the first week of each month. The index measures sentiment about business conditions in the manufacturing sector by surveying executives in the sector. Tomorrow's report is expected to show a reading of 54.6, up modestly from September's 54.5. A reading above 50 is considered a sign of growth in the sector. Therefore, smaller than expected reading would be good news for bonds and tomorrow’s mortgage rates.

Medium

Unknown

Factory Orders

September's Factory Orders data is Tuesday’s sole relevant data. This report is similar to the Durable Goods Orders release that was posted last week, except this version includes orders for both durable and non-durable goods. Analysts are expecting a 1.2% increase from August's level, signaling manufacturing strength. A decline would be favorable for the bond and mortgage markets.

Medium

Unknown

ADP Employment

Wednesday has two reports that we will be watching, starting with the ADP private-sector employment report at 8:15 AM. The release is expected to show 70,000 new non-governmental jobs were added to the economy in October after a 90,000 were added in September. While this report does draw attention because it involves employment data, it is often given more than it deserves because it is not accurate in predicting the government’s monthly Employment report that comes later in the week. Good news for the bond market and mortgage rates would be a decline in payrolls, indicating weakness in the employment sector.

Medium

Unknown

ISM Service Index

The Institute for Supply Management (ISM) will release their non-manufacturing index (aka service index) at 10:00 AM ET Wednesday. This is the sister report of tomorrow's ISM manufacturing index with this version tracking business executive opinions on conditions in the service sector rather than manufacturing. It is expected to show a reading of 54.6 for October, down from September's 54.9 to signal slightly slower activity in the sector. Bad news for rates would be a large increase since it would be a sign of economic strength.

Medium

Unknown

Productivity and Costs (Quarterly)

In addition to the weekly unemployment update, Thursday morning also has 3rd Quarter Productivity data set for release at 8:30 AM ET. A noticeably larger increase would be good news for the bond market because higher levels of employee productivity allow the economy to expand without pushing inflation higher. That reading is predicted to be up 3.1%. A secondary reading that tracks labor costs is expected to show a 1.4% rise in costs. However, it will take a significant variance from forecasts for this report to noticeably affect mortgage rates.

High

Unknown

Employment Situation

The week closes with two more economic releases Friday morning. First will be the almighty monthly governmental Employment report at 8:30 AM ET. It is comprised of many statistics and readings about the employment sector, but the ones we will watch the closest are the unemployment rate, the number of new jobs added during the month and average hourly earnings. Current forecasts call for the unemployment rate to have held at September’s 4.2% and an increase in payrolls of 60,000. The third headline number is the average earnings reading that is forecasted to have risen 0.3%. Weaker than expected readings should rally bonds enough to improve mortgage rates noticeably.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

November's preliminary reading of the University of Michigan's Index of Consumer Sentiment is the week's final relevant release. It is set to be posted at 10:00 AM ET Friday. The index gives us an indication of consumer willingness to spend by surveying consumers about confidence in their own financial situations. It is expected to be announced at 47.2, down from October's final reading of 48.0. Favorable news for bonds and mortgage rates would be a noticeably lower reading because waning sentiment means consumers are less optimistic about their own financial situations and are less likely to make large purchases in the near future. With consumer spending making up over two-thirds of our economy, any related data is watched closely.

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Unknown

none

Overall, Friday is the most important day of the week for rates because the Employment report carries such a high level of influence. The day rates remain the calmest could be Thursday. It should be another very active week for the bond market and mortgage rates, so proceed cautiously if still floating a rate and closing in the near future. As we saw last week, we can see them make a big move without warning.

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... Lock 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.

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