Rate Lock Advisory

Wednesday, April 9th

Wednesday’s bond market has opened down sharply again following new tariff headlines. Stocks have swung between positive and negative ground during early trading. At the moment the Dow is up 97 points and the Nasdaq is up 217 points. The bond market is currently down 20/32 (4.37%), which with yesterday’s heavy afternoon selling should push this morning’s mortgage rates higher than Tuesday’s early pricing by approximately .750 – 1.00 discount point. It is highly likely that you saw at least one upward revision to rates during afternoon trading yesterday. The actual size of this morning’s change depends on how much of an intraday revision was made yesterday.

20/32

Bonds

30 yr - 4.37%

97

Dow

37,743

217

NASDAQ

15,485

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM
Created with Raphaël 2.1.22.37%3.0125%3.6550000000000002%4.2975%4.94%12/15/20188/2/20183/25/201811/9/20177/3/20173/2/201710/18/20166/5/20162/5/20169/29/20155/17/20152/4/2015
National Average
1/1/2019
30 Year Fixed: 4.55%
15 Year Fixed: 4.01%
5/1 ARM: 2.76%

Indexes Affecting Rate Lock

High

Negative

Tariff News

There is no relevant economic data scheduled for release today. We are seeing bonds react to more tariff news. Today’s move is partly a result of China’s reciprocal 84% tariff announcement on all imported U.S. goods starting tomorrow. This was their response to the 104% tariff on Chinese goods sent to the U.S. that went into effect today. Rising tariffs are expected to fuel inflation, so this morning’s bond losses aren’t a surprise.

Medium

Unknown

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

We have two afternoon events set for today that have the potential to affect rates. First will be the 1:00 PM ET results announcement of today’s 10-year Treasury Note auction. A strong demand from investors would be good news for bonds and mortgage rates, but in the current environment it is hard to believe that will become a reality. With bond yields spiking due to tariff and inflation concerns, investors may sit on the sidelines of this sale until some of the unknowns become known. Inflation erodes the value of long-term securities, causing investors to sell them at a discount. This leads to higher yields and mortgage pricing tends to track bond yields. Today’s auction scenario will be repeated tomorrow afternoon when 30-year Bonds are sold.

Medium

Unknown

FOMC Meeting Minutes

Today’s second event will be the release of the minutes from last month’s FOMC meeting. Market participants will be looking at them closely as they give us insight into the Fed's current thought process and individual Fed member opinions regarding future monetary policy moves, particularly when they may start lowering key rates again. Any surprises in the 2:00 PM ET release could cause afternoon volatility in the markets with possible changes in mortgage pricing.

High

Unknown

Consumer Price Index (CPI)

Tomorrow brings us the release of the highly important and influential Consumer Price Index (CPI) for March at 8:30 AM ET. It measures consumer level inflation in the economy and any surprises can heavily affect the financial and mortgage markets. There are two portions of the report that analysts watch- the overall reading and the core data. The core data carries more significance to market participants because it excludes volatile food and energy prices. Forecasts show the overall rising 0.1% and the core reading up 0.3% for March. On an annual basis, the overall is expected to show a 2.6% pace, down from February’s 2.8%. The core data is predicted to have slowed from 3.1% in February to 3.0% last month.

High

Unknown

Inflation News

President Trump’s tariffs are already expected to boost inflation this year, so stronger than predicted numbers before they actually have an impact on the prices we pay would be quite troublesome for bonds and mortgage rates. Inflation makes long-term securities, such as mortgage-related bonds, less appealing to investors and leads to higher mortgage rates. Good news for rates would be weaker than forecasted readings tomorrow, especially year-over-year.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Also set for release tomorrow is last week’s unemployment update that is expected to reveal 223,000 new claims for jobless benefits were made. This would be an increase from the previous week’s 219,000 initial filings. Rising claims are a sign of weakness in the employment sector and bonds tend to thrive in softer economic conditions. Therefore, good news for rates would be a much larger number of initial claims. However, the CPI carries much more importance in the markets than this weekly snapshot and will draw much more attention from bond traders.

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.