Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Unknown

Factory Orders

June's Factory Orders data will kick-off this week’s activities at 10:00 AM ET tomorrow. This report is similar to the recently released Durable Goods Orders report but tracks new orders for both durable and non-durable goods during the month of June. Since a significant portion of the data was released previously, this version likely will not have a big impact on the markets. Analysts are expecting to see a decline in new orders of approximately 5.0% following April’s spike of 8.2%. A larger than expected decline would be considered good news for bonds and mortgage pricing, but it will take a large variance from forecasts for this report to influence mortgage rates.

Medium

Unknown

ISM Service Index

The Institute for Supply Management's (ISM) non-manufacturing index (aka service index) for July is next on the list. It will be posted Tuesday morning at 10:00 AM ET. This is the sister report of last Friday's ISM manufacturing index with this version tracking executive opinions on business conditions in the service sector rather than manufacturing. It is expected to show a reading of 51.2, up from June's 50.8. A reading above 50.0 means more surveyed executives felt business improved during the month than those who said it worsened. Good news for mortgage rates would be a much weaker than predicted reading, following suit of last week's manufacturing index.

High

Unknown

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

There is no relevant data set for release Wednesday, but we do have a Treasury auction taking place that could affect rates during afternoon trading. 10-year Treasury Notes are being sold with results of the auction being posted at 1:00 PM ET. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading Wednesday. However, a weak interest could lead to broader selling in the bond market that may push mortgage rates higher. This scenario will be repeated Thursday when 30-year Bonds are sold.

Medium

Unknown

Productivity and Costs (Quarterly)

Thursday has two relatively minor pieces of data scheduled. Besides the weekly unemployment update, we will also get the 2nd quarter Productivity Index at 8:30 AM ET. Forecasts show a 2.0% increase in worker output after declining 1.5% during the first three months of the year. Employee productivity is relevant because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. This release also includes a reading on labor costs that can be quite influential if it shows a surprise. A larger rise in output and a softer increase in labor costs would be favorable for rates.

Medium

Unknown

Fed Talk

Also worth noting is the fact the Fed's required pre-FOMC meeting quiet period is no longer applicable, so we will be hearing from individual Fed members in the coming weeks. There are several of them scheduled over the middle and latter days of the week. Normally, they wouldn't be of much interest so close to the FOMC events last Wednesday. However, the economic reports that were posted last Friday, some of which were highly important data and showed surprisingly weak results, may affect their talking points and audience questions during these speeches.

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Unknown

none

Overall, Tuesday’s ISM report or Wednesday’s auction results may make either of those days the most active for mortgage rates. Friday is a good candidate for calmest day with no data scheduled. After Friday’s Employment report fueled a strong bond rally, we could see an extension of that buying tomorrow or a small correction. Hence, we are likely to see movement in rates tomorrow even though the direction they will go is unknown. If still floating an interest rate and closing in the near future, it would be wise to keep an eye on the markets as they may get active without notice.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Factory Orders

ISM Service Index

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

Productivity and Costs (Quarterly)

Fed Talk

none

Float / Lock Recommendation