Rate Lock Advisory

Thursday, July 10th

Thursday’s bond market has opened in negative territory to erase yesterday’s late rally. Stocks are mixed with the Dow up 102 points and the Nasdaq down 89 points. The bond market is currently down 8/32 (4.36%), which should keep this morning’s mortgage rates close to Wednesday’s early pricing. If you saw an intraday improvement late yesterday, you should see an increase this morning of about the same size.

8/32

Bonds

30 yr - 4.36%

102

Dow

44,560

89

NASDAQ

20,522

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium

Unknown

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

Yesterday’s 10-year Treasury Note auction went relatively well. The 1:00 PM ET results announcement indicated there was an above average demand from investors compared to other recent sales, meaning there is still a solid appetite for long-term securities. Bonds had already improved from morning levels before the auction results were posted, but did appear to extend those gains afterward. Accordingly, we can consider the sale to be favorable for bonds and mortgage rates. It also allows us to be optimistic about today’s 30-year Bond auction. The results of today’s sale will also be available at 1:00 PM ET, making this another afternoon event for rates.

Medium

Neutral

FOMC Meeting Minutes

The minutes from the June 17-18th FOMC meeting that were also posted yesterday afternoon gave us some useful insight into the Fed’s individual opinions on what to do with key short-term interest rates. It is important to remember that his meeting took place before June’s Employment report was released, so an opinion or two may have now been swayed by that data. Of the 19 Fed members participating in the meeting, only a couple of them felt the upcoming FOMC meeting at the end of this month would be a good time to make a rate cut. Some of them, which we can assume is more than a couple, felt no rate cuts are needed throughout the rest of this year.

Medium

Positive

FOMC Meeting Minutes

Another group felt that since inflation remains above the Fed’s target of 2.00% annually and the U.S. economy remains resilient, that they are likely close to their goal of reaching what is known as neutral status. This is where key rates are exactly where they need to be to keep inflation tame and still allow economic growth. In other words, where rates need to be to not restrict or boost economic activity. That group feels there are only a couple more rate cuts needed over the next two years and then the Fed should be finished.

Medium

Positive

FOMC Meeting Minutes

In short, the minutes appear to point to no rate cut at this month’s FOMC meeting but a reasonable chance of one coming at the September meeting, depending on what inflation and other economic data show in the meantime. Even though there are 19 members participating in the meeting, only twelve have voting rights. The minutes showed the vote to leave key rates unchanged last month was unanimous, meaning there has to be a big change in opinions for the Fed to cut rates later this month and last week’s Employment report certainly did not help do that. Still, after the minutes were released, we saw bond prices make another move higher (lower yields). This led to quite a few lenders issuing an intraday improvement to mortgage pricing, allowing us to label the report as good news for rates.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

This morning’s sole economic release was last week’s unemployment update at 8:30 AM ET. It showed 227,000 new claims for jobless benefits were made during the week. This was a decline from the previous week’s revised 232,000 initial filings, signaling strength in the employment sector. Analysts were expecting to see an increase in new claims, not a decline. Therefore, we are labeling this report as bad news for bond prices and mortgage rates.

Medium

Unknown

Fed Talk

We also have several Fed-member speeches today that may create a headline or two. They are scheduled for 10:00 AM, 1:15 PM and 2:30 PM. If there is a reaction to any of them, it will come around those times. With so little scheduled this week, any surprises may draw more of a reaction than normal.

Low

Unknown

None

Tomorrow doesn’t have anything scheduled that we need to be concerned about. Unless something unexpected happens, it should be a fairly quiet day for mortgage rates.

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.

Milestone Mortgage, Inc. NMLS#136714

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Carmel, IN 46032
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