Rate Lock Advisory

Sunday, November 27th

This week has six economic reports for the markets to digest in addition to the Fed Beige Book and a speech by Fed Chairman Powell. Two of those economic releases are considered to be highly important and can heavily affect the markets. The week starts light with nothing scheduled tomorrow, but don't be surprised to see bonds and mortgage rates move as traders prepare for this week’s heavy calendar.

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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

November’s Consumer Confidence Index (CCI) will start this week’s activities late Tuesday morning. This Conference Board index helps us track consumer confidence in their own financial and employment situation. It is thought that they are more apt to make larger purchases in the near future, fueling economic growth if confidence is high. This is important because consumer spending makes up over two-thirds of the U.S. economy and strength in it makes long-term securities such as mortgage-related bonds less attractive to investors. Traders are expecting to see the index slip a couple points from October's 102.5 meaning surveyed consumers were less optimistic about their own financial situations this month than they were last month. The weaker the reading, the better the news for mortgage rates.

Medium


Unknown


ADP Employment

Wednesday begins with the release of November's ADP Employment report at 8:15 AM ET that tracks changes in private-sector jobs using the company's payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week's calendar. The markets are expecting to see 200,000 new private-sector payrolls last month. A much smaller number would be considered good news for mortgage rates.

Medium


Unknown


GDP Rev 2 (month after Rev 1)

Also early Wednesday morning will be the release of the first revision to the 3rd Quarter Gross Domestic Product (GDP). Last month's preliminary estimate of a 2.6% annual rate of growth is expected to be revised slightly higher. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the benchmark measurement of economic growth. Good news for rates would be a downward revision, meaning the economy was not as strong as previously thought. However, this data is somewhat aged at this point covering the July, August and September months. That means it will take a noticeable revision to cause a move in rates.

High


Unknown


Fed Talk

There are also two afternoon events that the markets will be watching. Fed Chairman Powell has a speaking engagement at 1:30 PM ET Wednesday. Fed members make speeches on a regular basis, many without much fanfare. However, this one comes from Chairman Powell and the topic is titled Economic Outlook, Inflation and the Labor Market. All three are hot-topics for the bond market and mortgage rates. At the very least we will see a minor move in bond prices during his speech. On the other hand, his words could be a significant market mover, especially when those subjects are being discussed.

Medium


Unknown


Fed Beige Book

The second afternoon event will be the Federal Reserve's Beige Book at 2:00 PM ET Wednesday. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region via business contacts. Since the Fed uses this info during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, employment or future activity. If there is a reaction to the report, it will come during mid-afternoon trading.

Medium


Unknown


Personal Income and Outlays

Thursday will also be a busy day for the markets. October's Personal Income and Outlays data at 8:30 AM ET will give us an indication of consumer ability to spend and their current spending habits. It also includes an inflation reading (PCE index) that the Fed relies on when making their monetary policy decisions. Because consumer spending is such a large part of the U.S. economy and controlling inflation is a key part of the Fed's responsibilities, data such as this can influence the markets and mortgage rates. The bond market tends to thrive in weaker economic conditions, so good news for mortgage rates would be softer than expected readings, particularly in the PCE. Current forecasts show a 0.4% increase in the income reading while spending rose 0.8%. Analysts are expecting the core PCE to have increased 0.2%.

High


Unknown


ISM Index (Institute for Supply Management)

Next up is November's Institute for Supply Management's (ISM) manufacturing index at 10:00 AM ET Thursday. This highly important index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Predictions show a decline from October's reading, which was announced as 50.2. This is extremely important because a reading below 50.0 means more surveyed manufacturing executives felt business worsened during the month than those who said it improved and is considered to be recessionary. The expected 49.9 would be the first sub-50 reading since May 2020, indicating a slowing manufacturing sector. Weaker economic conditions make bonds more attractive and usually leads to lower mortgage rates.

High


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Employment Situation

Friday has another very important report scheduled to close this week’s calendar. November's Employment report will be released at 8:30 AM ET, giving us the U.S. unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. They are expected to reveal the unemployment rate held at 3.7% while 200,000 new jobs were added back to the economy. The income reading is forecasted to show an increase of 0.3%. The ideal scenario for mortgage shoppers would be a higher unemployment rate, a much smaller increase in payrolls (or a decline) and no change in the earnings reading. Those types of numbers should cause bond prices to rise and mortgage rates to move noticeably lower Friday. However, stronger than expected readings may fuel bond selling that would lead to higher mortgage rates.

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Unknown


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Overall, Friday is the best candidate for most important day for rates due to the Employment report being released, but there is a good chance of seeing noticeable movement in pricing multiple days, including Wednesday and Thursday. With such a busy week, watching the markets carefully would be a good idea if still floating an interest rate and closing soon.

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.