Indexes Affecting Rate Lock

Low

Positive

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

Yesterday’s 30-year Treasury Bond auction followed suit of Wednesday’s 10-year Note sale by drawing a strong demand from investors. This is good news for mortgage shoppers because mortgage rates are based on long-term debt also. However, the afternoon bloodbath in bonds made the auction results irrelevant. The driving forces of spiking oil prices and Iran conflict expanding led to a major sell-off in bonds, causing intraday rate increases on top of the morning jump in rates.

High

Negative

Consumer Price Index (CPI)

August’s Consumer Price Index (CPI) was today’s major economic release. The 8:30 AM ET report revealed consumer level inflation was close to expectations with the overall CPI rising 0.4% last month to match forecasts. The bad news came in the monthly core reading that excludes more volatile food and energy costs. It rose 0.3% when analysts were expecting to see a 0.2% increase. The annual readings didn’t show any surprises with the overall CPI holding at July’s 3.4% annual rate and the core data slowing slightly from 2.5% to 2.4%.

Medium

Positive

Univ of Mich Consumer Sentiment (Prelim)

We did get some favorable news in today’s second release. The University of Michigan announced late this morning that their Index of Consumer Sentiment for September stands at 47.8. This was a large decline from August’s 51.7 and fell well short of predictions. The monthly decline is good news for bonds and mortgage rates because waning confidence in employment and financial situations usually translates into softer consumer spending numbers that make up a significant portion of the U.S. economy. It is not this report that is fueling this morning’s early gains in bonds though. While this report is favorable, bonds were looking to recover part of yesterday’s significant losses long before this morning’s data was posted.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Next week has just a small handful of economic reports scheduled for release, along with another Treasury auction. One of the economic releases gives us a key measurement of consumer spending and it comes the same day as the much-anticipated FOMC meeting adjourns. Wednesday is easily the most important day of the week due to the Retail Sales report and FOMC meeting that includes revised economic projections. This week’s events make a Fed rate hike highly likely at next week’s meeting. We will address that subject in detail, along with the rest of the week’s calendar, in Sunday evening’s weekly preview.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Consumer Price Index (CPI)

Univ of Mich Consumer Sentiment (Prelim)

Federal Open Market Committee (FOMC) Statement

Float / Lock Recommendation