Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Low

Positive

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

Yesterday’s 20-year Treasury Bond auction went relatively well with the benchmarks indicating a decent demand for the securities. We can’t label it a strong auction, but investor interest was good enough for the broader bond markets to improve slightly after results were announced at 1:00 PM ET. However, it wasn’t enough of a move to cause widespread intraday improvements to mortgage rates.

Low

Negative

FOMC Meeting Minutes

The second event yesterday afternoon drew much more attention than the auction did. Minutes from last month’s FOMC meeting were posted at 2:00 PM ET. They didn’t reveal too much in terms of new bits of information. The strong consensus amongst the committee members was that tariff-related inflation is more of a concern than a slowing employment sector and that more time is needed to see how much of an impact it will have before cutting key short-term interest rates. At least that was the thought process from most of the FOMC members at that time. Since the adjournment, we have received much weaker than expected employment data and considerably strong inflation news. As expected, the markets treated yesterday’s release as if it was mostly outdated. We saw a minor negative reaction in bonds after the minutes were posted, but that more or less just erased the post-auction announcement gains.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

There were three economic reports posted this morning, all considered to be moderately important to the market. First was last week’s unemployment update that showed 235,000 new claims for jobless benefits were made. This was an increase from the previous week’s 224,000 initial filings, signaling the employment sector softened a little last week. The increase in claims is good news for bonds and mortgage rates, especially since analysts were expecting to see a number around 225,000.

Medium

Negative

Existing Home Sales from National Assoc of Realtors

July's Existing Home Sales report was released at 10:00 AM ET this morning. The National Association of Realtors announced home resales rose a stronger than expected 2.0% last month, giving a hint of strength in the housing sector. The increase is being attributed to a drop in mortgage rates and more supply of homes to choose from. Stronger housing activity is an indication of broader economic growth, making the data bad news for bonds and mortgage pricing.

Medium

Neutral

Leading Economic Indicators (LEI) from the Conference Board

Also posted late this morning was July's Leading Economic Indicators (LEI). The Conference Board said they matched forecasts of a 0.1% decline. These indicators attempt to predict changes in economic activity over the next few months. The slight decline means they are pointing to flat or a minor slowing in activity. Since there were no surprises in the report, we can label it neutral for mortgage rates.

High

Unknown

Fed Talk

Tomorrow doesn’t have any relevant economic data for the markets to trade on, but there is what is expected to be, a highly influential Fed speech set for 10:00 AM ET. Fed Chairman Powell will speak at the Fed’s annual Jackson Hole conference in Wyoming tomorrow. This event is often considered the Fed Chairman’s annual outline for monetary policy and always draws the attention of the markets. Considering the difficult position the Fed may be in regarding what to do at next month’s meeting, bond traders will be closely following his words for an indication of how the data that came after the FOMC meeting may have altered the Fed’s thought process and game plan for short-term rates.

High

Unknown

Misc Fed

We can expect to see some volatility late tomorrow morning that possibly carries into early afternoon trading. The best possible prediction that we can give is that confirmation of a rate cut next month with at least one other to come before the end of the year will likely be received as good news in the bond and mortgage markets. However, if inflation concerns seem to be the primary focus, meaning there is less likelihood of a Fed rate cut next month, we can expect to see bond yields and mortgage pricing move higher tomorrow.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

FOMC Meeting Minutes

Weekly Unemployment Claims (every Thursday)

Existing Home Sales from National Assoc of Realtors

Leading Economic Indicators (LEI) from the Conference Board

Fed Talk

Misc Fed

Float / Lock Recommendation