Rate Lock Advisory Tuesday, January 20th Tuesday’s bond market has opened well in negative territory following weekend geopolitical headlines that have turned into tariff issues. Stocks are responding the same way with the Dow down 727 points and the Nasdaq down 403 points. The bond market is currently down 15/32 (4.28%), which should push this morning’s mortgage rates higher than Friday’s early pricing by approximately .250 of a discount point. The stock and bond markets were closed yesterday for the Martin Luther King Jr holiday. 15/32 Bonds 30 yr - 4.28% 728 Dow 48,632 403 NASDAQ 23,112 Mortgage Rate Trend Trailing 90 Days - National Average 30 Year Fixed 15 Year Fixed 5/1 ARM Indexes Affecting Rate Lock HighUnknownNoneThere is no relevant economic data being released today. The rest of the week has only three monthly or quarterly economic reports that may influence mortgage rates, one of which is considered to be highly important. There is also a Treasury auction that may come into play midweek, a speech by President Trump tomorrow morning and an uptick in the number of corporate earnings announcements throughout the week. HighNegativeTariff NewsThis morning’s bond losses can be attributed to tariff concerns from President Trump’s announcement of a 10% duty on all goods coming from eight European countries that have publicly disagreed with his plan to acquire Greenland and their possible response to his move. Bond reaction to tariff news has been unpredictable over the past year with fear of higher costs and rising inflation sometimes having a negative impact, but looking at the potential for them to be a drag on the U.S. economy fueling a positive reaction at other times. How the tariffs may fuel inflation is the narrative this morning. MediumUnknownGeopolitical/Financial IssuesTomorrow also lacks any economic releases that we need to be concerned about. President Trump is expected to speak tomorrow morning at the annual Davos World Economic Forum in Switzerland. He likely will speak more about political issues than financial matters that would be relevant to mortgage pricing. However, the markets will be watching his speech for insight as to what the immediate future may bring. It appears he will be speaking at 8:30 AM ET, meaning if there is a reaction, it will happen during morning hours tomorrow. MediumUnknownTreasury Auctions (5,7,10,20,30 year)This week’s first regularly scheduled event will be a 20-year Treasury Bond auction that is also taking place tomorrow. These auctions show what type of demand investors have for longer-term securities. If demand is strong, particularly from international buyers, we may see the broader bond market improve after results are posted at 1:00 PM ET. On the other hand, lackluster interest in the securities may lead to an upward revision to rates before the end of the day. MediumUnknownCorporate EarningsAlso worth mentioning is that corporate earnings season gets into full swing this week. There are plenty of big-named public companies announcing their quarterly and annual earnings this week. These generally influence stock trading more than bonds. However, if the common theme is disappointing results from the bellwether companies, a strong negative reaction in stocks could fuel bond buying that pushes yields lower. This would be good news for mortgage shoppers since mortgage rates tend to track bond yields. HighUnknownPersonal Income and OutlaysOverall, Thursday looks to be the most important day for rates due to the importance of the PCE indexes within the Personal Income and Outlays report that will be posted that day. If President Trump gives us a major surprise tomorrow, we could also see a noticeable move in rates then. The calmest day for rates may be Friday. We are now in the Fed’s mandatory pre-FOMC quiet period, meaning Fed speeches should not be a factor this week. Even though there is not a large number of scheduled events this week, there still is a high probability of seeing movement in mortgage rates multiple days. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future. 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.
Tuesday’s bond market has opened well in negative territory following weekend geopolitical headlines that have turned into tariff issues. Stocks are responding the same way with the Dow down 727 points and the Nasdaq down 403 points. The bond market is currently down 15/32 (4.28%), which should push this morning’s mortgage rates higher than Friday’s early pricing by approximately .250 of a discount point. The stock and bond markets were closed yesterday for the Martin Luther King Jr holiday. 15/32 Bonds 30 yr - 4.28% 728 Dow 48,632 403 NASDAQ 23,112
Indexes Affecting Rate Lock HighUnknownNoneThere is no relevant economic data being released today. The rest of the week has only three monthly or quarterly economic reports that may influence mortgage rates, one of which is considered to be highly important. There is also a Treasury auction that may come into play midweek, a speech by President Trump tomorrow morning and an uptick in the number of corporate earnings announcements throughout the week. HighNegativeTariff NewsThis morning’s bond losses can be attributed to tariff concerns from President Trump’s announcement of a 10% duty on all goods coming from eight European countries that have publicly disagreed with his plan to acquire Greenland and their possible response to his move. Bond reaction to tariff news has been unpredictable over the past year with fear of higher costs and rising inflation sometimes having a negative impact, but looking at the potential for them to be a drag on the U.S. economy fueling a positive reaction at other times. How the tariffs may fuel inflation is the narrative this morning. MediumUnknownGeopolitical/Financial IssuesTomorrow also lacks any economic releases that we need to be concerned about. President Trump is expected to speak tomorrow morning at the annual Davos World Economic Forum in Switzerland. He likely will speak more about political issues than financial matters that would be relevant to mortgage pricing. However, the markets will be watching his speech for insight as to what the immediate future may bring. It appears he will be speaking at 8:30 AM ET, meaning if there is a reaction, it will happen during morning hours tomorrow. MediumUnknownTreasury Auctions (5,7,10,20,30 year)This week’s first regularly scheduled event will be a 20-year Treasury Bond auction that is also taking place tomorrow. These auctions show what type of demand investors have for longer-term securities. If demand is strong, particularly from international buyers, we may see the broader bond market improve after results are posted at 1:00 PM ET. On the other hand, lackluster interest in the securities may lead to an upward revision to rates before the end of the day. MediumUnknownCorporate EarningsAlso worth mentioning is that corporate earnings season gets into full swing this week. There are plenty of big-named public companies announcing their quarterly and annual earnings this week. These generally influence stock trading more than bonds. However, if the common theme is disappointing results from the bellwether companies, a strong negative reaction in stocks could fuel bond buying that pushes yields lower. This would be good news for mortgage shoppers since mortgage rates tend to track bond yields. HighUnknownPersonal Income and OutlaysOverall, Thursday looks to be the most important day for rates due to the importance of the PCE indexes within the Personal Income and Outlays report that will be posted that day. If President Trump gives us a major surprise tomorrow, we could also see a noticeable move in rates then. The calmest day for rates may be Friday. We are now in the Fed’s mandatory pre-FOMC quiet period, meaning Fed speeches should not be a factor this week. Even though there is not a large number of scheduled events this week, there still is a high probability of seeing movement in mortgage rates multiple days. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.
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.