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Weekly Rate Lock Advisory

There are five pieces of economic news that may affect mortgage rates this week. There are relevant reports scheduled for release every day except for Monday, meaning it likely will be a fairly active week for mortgage rates. Even though there is no relevant data being posted Monday, we will still likely see a change in mortgage rates due to Friday's market movements that came as a result of news from overseas-particularly Dubai. Many lenders were closed or on a skeleton staff Friday, so we should see those improvements reflected in Monday's rates. 

November's manufacturing index from the Institute for Supply Management (ISM) will kick off the week's data at 10:00 AM ET Tuesday. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. Current forecasts call for a decline in sentiment from October to November. October's reading was previously announced as 55.7. A weaker reading than the expected 54.8 would be good news for the bond market and mortgage rates. A reading below 50 means that more surveyed trade executives felt business worsened during the month than those who felt it had improved. The lower the reading the better the news for bonds because waning sentiment indicates a slowing manufacturing sector and makes a broader economic recovery less likely.

Wednesday's only relevant data is the Fed Beige Book release at 2:00 PM ET. This report, which is simply named after the color of its cover, details economic conditions by region. It is relied on heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any significant surprises.

The next piece of data that we need to be concerned with comes Thursday morning with the release of the revised 3rd Quarter Productivity report. This index is expected to show a downward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn't necessarily bad for the bond market. It is the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of 8.6%, down from the previous estimate of 9.5%. 

The Labor Department will post November's Employment report early Friday morning. This is arguably the most important monthly report we see. It is comprised of many statistics and readings, but the most important ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for no change in the unemployment rate of 10.2%, payrolls down approximately 114,000 and an increase of 0.2% in average earnings. An ideal scenario for mortgage shoppers would be a higher unemployment rate than 10.2%, a larger decline in jobs and no change in the earnings reading.

Also scheduled for release Friday is October's Factory Orders. This report is similar to last week's Durable Goods Orders release by giving us a measurement of manufacturing sector strength, except this one includes orders for both durable and non-durable goods. This data usually isn't a major influence on bond trading, but there is little chance of it impacting mortgage rates this Friday because the Employment report is an extremely important report. Analysts are expecting to see a slight increase in new orders of approximately 0.1%. 

Overall, the most important day of the week is Friday with the employment figures being released, but we may also see sizable movement in rates Tuesday. Friday's data could cause a significant change in rates. If it reveals stronger than expected results we may see rates spike higher Friday morning, possibly erasing any gains from the week. It will probably be the key to rates moving lower or higher for the week. But we do have approximately .125 - .250 of a discount point improvement waiting for us in tomorrow morning's rates, unless something unexpected happens during early trading tomorrow. However, I suspect it will be a fairly active week for the markets and mortgage pricing, so it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float 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. 

Weekly Rate Lock Advisory 

This holiday-shortened trading week brings us the release of six monthly or quarterly economic reports. Only a couple of the reports being released are considered to be of high importance to the markets. With the Christmas holiday falling during the week we can expect very thin trading, meaning that we may see a larger reaction than normal to some news because there will be fewer traders working and less transactions being made.

There is no relevant economic news scheduled for release Monday, so look for the stock markets to help drive bond trading and mortgage rates. Two of the week's reports are scheduled for posting Tuesday. The first is the final revision to the 3rd Quarter GDP. I don't think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month's first revision showed that the economy expanded at a 2.8% annual pace during the quarter and this month's revision is expected to show the same. A significant upward revision would be considered bad news for bonds, but since this data is quite aged at this point I don't think it will have much of an impact on mortgage rates Tuesday.

The second report of the day is November's Existing Home Sales report. This release will come from the National Association of Realtors while Wednesday's New Home Sales data is a Commerce Department report. Both give us a measurement of housing sector strength and mortgage credit demand, however, neither are considered to be of high importance. And both of the reports are expected to show a small increase in sales. Weaker than expected readings would be considered positive for bonds and mortgage rates because they hint at a weakening housing market, but unless the actual reading varies greatly from forecasts the results will probably have little or no impact on mortgage rates.

Wednesday brings us the release of three reports. The first is November's Personal Income and Outlays data. It will give us an important measurement of consumer ability to spend and current spending habits. Since consumer spending makes up two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.5% increase in income and a 0.7% increase in spending. If this report reveals weaker than expected readings, we should see the bond market improve and mortgage rates drop slightly Wednesday morning.

The second report of the day comes late morning when the revised University of Michigan Index of Consumer Sentiment for December is posted. Current forecasts are calling for a small upward revision from the preliminary reading of 73.4. This is fairly important because rising consumer confidence indicates that consumers may be more apt to make large purchases in the near future. An unexpected upward revision could lead to slightly higher mortgage rates Wednesday.

The last report of the day is November's New Home Sales. It is this week's least important report and is unlikely to influence mortgage rates.

November's Durable Goods Orders will be posted early Thursday morning. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years. Analysts are expecting the report to show a 0.5% increase in new orders. A decline in orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should drive mortgage rates lower. However, a larger than expected rise in orders could lead to mortgage rates moving higher early Thursday morning.

Overall, I am expecting to see some movement in the markets and mortgage rates, but nothing drastic unless we get some surprising results from the week's da ta. The bond market will close early Thursday and will be closed all day Friday in observance of the Christmas Day holiday. This means that firms that trade bonds will likely be keeping only a skeleton staff the latter part of the week and raises the possibility of a stronger reaction to surprises in the economic data than we normally would see. Accordingly, proceed cautiously this week if still floating an interest rate and closing in the immediate future.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float 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.

This week is fairly busy in terms of the number of economic releases scheduled for release with five on the agenda in addition to the last Federal Open Market Committee (FOMC) meeting of the year. Two of the five economic reports are considered to be of high importance, so the data should have a heavy influence on the markets and mortgage rates this week. 

There is no relevant economic news due out Monday. This means we can expect the stock markets to drive bond trading and mortgage rates. If the major stock indexes open the week with gains tomorrow morning, bonds may move lower, pushing mortgage rates higher. But a weak open in stocks could lead to slightly lower mortgage rates Monday.

The first relevant report of the week is one of the two highly important ones. The Labor Department will release November's Producer Price Index (PPI) early Tuesday morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If Tuesday's release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should fair well and mortgage rates should fall. Current forecasts are showing a 0.8% increase in the overall index and a 0.2% rise in the core data.

November's Industrial Production data is also scheduled to be posted Tuesday morning, but a little later than the PPI. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting it to show a 0.5% increase in output. A smaller than expected rise would be good news for bonds, while a stronger than expected reading may result in slightly higher mortgage pricing. However, the PPI release is more important to the markets than this data is.

The week's most important economic data comes Wednesday morning when November's Consumer Price Index (CPI) is posted. It is similar to Tuesday's Producer Price Index, except it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts call for an increase of 0.4% in the overall index and a 0.2% rise in the core data reading. The core data is watched more closely because it excludes more volatile food and energy prices, giving a more stabile reading for analysts to consider. 

November's Housing Starts report will also be released Wednesday morning, but I don't see it causing much movement in mortgage rates. This report, which is expected to show a sizable increase in starts of new homes, gives us an indication of housing sector strength and future mortgage credit demand. However, it can be considered the least important of this week's news.

The last FOMC meeting of the year begins Tuesday and will adjourn at 2:15 PM ET Wednesday. There is not much debate about what the Fed will do at this meeting with little chance of them raising key short-term interest rates. Therefore, the post meeting statement will likely be the sole source of a market reaction. This statement has the potential to have a significant influence on the markets and mortgage rates as investors look for any indication of what and when the Fed may do next. Generally speaking, the bond market would like to hear something that indicates the Fed will not be raising rates anytime soon.

The last piece of economic news will be posted Thursday morning with the release of the Conference Board's Leading Economic Indicators (LEI) for the month of November. This 10:00 AM release attempts to measure or predict economic activity over the next three to six months. It is expected to show a sizable increase in activity, meaning that it predicts any expanding economy over the next several months. This probably will not have much of an impact on bond prices or affect mortgage rates unless it exceeds current forecasts of a 0.7% increase from October's reading. The lower the reading, the better the news for bonds. If it shows a smaller increase, the bond market may move slightly higher, improving mortgage rates slightly.

Overall, expect to see a pretty volatile week in the financial markets and mortgage pricing. The most important day of the week is certainly Wednesday with the CPI and the FOMC meeting both scheduled. However, we may see noticeable movement in rates Tuesday also. Please maintain contact with your mortgage professional if you have not locked an interest rate yet because we may see sizable changes to mortgage pricing more than one day t his week.

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... Float 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. 

Weekly Rate Lock Advisory 

This week is fairly light in terms of the number of economic releases scheduled for release. There are only three on the agenda but one of them is considered to be very important and can heavily influence the markets and mortgage pricing. In addition, there are two Treasury auctions the middle part of the week that may hurt or help boost bond prices, depending on how strong of a demand there is for the sales. Since all of the relevant data is scheduled for release Thursday and Friday, the most movement in rates will likely be the middle or latter part of the week.

Fed Chairman Bernanke will be speaking to the Economic Club of Washington D.C. at noon Monday. This is not considered to be an important speech and likely will not influence mortgage rates. However, whenever he does speak publicly, the possibility does exist that his words could rattle or rally the markets. I am not concerned about this one and don't feel there should be much attention placed on it.

The two important Treasury auctions are the 10-year Note sale Wednesday and the 30-year Bond sale Thursday. Wednesday's auction is the more important of the two events and will likely influence mortgage rates more. Results of each sale will be posted at 1:00 PM ET. If they were met with a strong demand from investors, particularly international buyers, we should see afternoon strength in bonds and improvements to mortgage pricing those days.

There is no relevant economic news scheduled for release Monday, Tuesday or Wednesday. October's Goods and Services Trade Balance report will be posted early Thursday morning. This report gives the size of the U.S. trade deficit, but it is the week's least important release. It is expected to show a $37.0 billion trade deficit. Unless it varies greatly from forecasts, I don't expect it to affect mortgage pricing. 

The most important data of the week comes early Friday morning with the release of November's Retail Sales report. This data is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. Current forecasts call for it to show a 0.7% increase in sales from October's levels. If it reveals weaker than expected sales, the bond market should thrive and mortgage rates should fall as a result. A stronger than expected reading could fuel stock market gains and push mortgage rates higher Friday morning. 

Also Friday is the release of December's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly. However, with the Retail Sales data report before this data, I don't expect it to affect mortgage rates much. It is expected to show a reading of 6 8.5, which would be an increase from last month's final reading.

Overall, expect to see a pretty volatile second half of the week with the biggest moves in mortgage pricing likely to come Wednesday or Friday. Friday's Retail Sales report can cause a great deal of movement in rates, but Wednesday's Treasury auction may also help determine if rates will close the week higher or lower than tomorrow's opening levels. It will also be interesting to see if bonds extend Friday's selling into tomorrow's trading or if they recover some of those losses. This looks to be one of those weeks that maintaining contact with your mortgage professional would be wise.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float 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. 

Checking Housing Pulse

Pending home sales rise for the ninth month in a row, with CNBC's Diana Olick and the Power Lunch crew.