Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Low

Unknown

New Home Sales

Beginning this week's economic releases will be July's New Home Sales report at 10:00 AM ET tomorrow. This report will give us an indication of housing sector strength and mortgage credit demand but tracks only a small portion of all home sales. An overwhelming majority of U.S. home sales were covered in last week's Existing Home Sales report. Current forecasts show a rise in sales of newly constructed homes last month, hinting at a bit of housing strength. A larger increase in sales would make the data negative for mortgage rates even though we should see only a minor reaction to the report regardless of what it shows.

High

Unknown

Durable Goods Orders

July's Durable Goods Orders report is next, set for release at 8:30 AM ET Tuesday. This report gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are expecting to see a large decline of 4.0% in new orders, pointing to softer manufacturing activity last month. This data is known to be quite volatile from month to month, so a decline doesn't necessarily raise too much concern about the economy. However, an unexpected increase will be bad news for the bond market and mortgage rates. A secondary reading that excludes more volatile transportation-related orders is expected to rise 0.1%. Weaker readings would be good news for the bond and mortgage markets.

Medium

Unknown

Consumer Confidence Index

The Conference Board will post their Consumer Confidence Index (CCI) for August at 10:00 AM ET Tuesday morning. This index measures consumer sentiment about their own financial and employment situations, giving us an idea about consumer willingness to spend. If consumers are more confident in their finances, they are more apt to spend money. Since consumer spending makes up over two-thirds of the U.S. economy, this data is watched closely. A noticeable decline in confidence would indicate that surveyed consumers probably will not make a large purchase in the immediate future, making broader economic growth more difficult. The index is expected to come in at 96.5, which would be a decline from July's 97.2. The lower the reading, the better the news for bonds and mortgage pricing.

Medium

Unknown

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

Wednesday is the only day of the week without at least one piece of economic data scheduled. However, the first of the week's two relevant Treasury auctions will be taking place that day. 5-year Treasury Notes are being sold Wednesday, followed by 7-year Notes Thursday. Results will be announced at 1:00 PM ET those days. These sales don't directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, meaning a weak interest in the securities, we could see broader selling in the bond market after results are announced. A strong demand from investors would be good news and may lead to a late improvement to mortgage pricing Wednesday and/or Thursday afternoon.

Medium

Unknown

GDP Rev 1 (month after initial)

Along with last week's unemployment figures, we will also get the first revision to the 2nd Quarter Gross Domestic Product (GDP) reading at 8:30 AM ET Thursday. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best benchmark of economic growth or contraction. This reading is the second of three that we see each quarter. Last month's preliminary reading revealed that the economy grew at an annual rate of 3.0%. Thursday's revision is expected to show the same. A minor upward or downward adjustment won't have much of an impact on the markets or rates since the data is a bit aged at this point. A stronger economy usually makes bonds less appealing to investors, leading to higher mortgage rates.

High

Unknown

Personal Income and Outlays

Friday has the remaining two pieces of relevant economic data that we need to be concerned about. The first is July's Personal Income and Outlays report at 8:30 AM ET, giving us an idea of consumer ability to spend and current spending habits. It is expected to show a 0.4% rise in income and a 0.5% rise in spending. Since consumer spending makes up such a large portion of the U.S. economy, weaker than expected numbers would be considered good news for the bond market and mortgage rates. What makes this report so important to the markets though, are key inflation readings (PCE and Core PCE indexes) within the data that the Fed relies heavily on during their FOMC meetings. This will be the last release of the PCE readings before next month’s FOMC meeting, meaning they may affect how the Fed votes what to do with short-term interest rates.

Medium

Unknown

Univ of Mich Consumer Sentiment (Rev)

The final report of the week will be the University of Michigan's revised Index of Consumer Sentiment for August at 10:00 AM ET Friday. This sentiment index helps us track consumer willingness to spend. It is expected to have held at August's preliminary reading of 58.6 from two weeks ago. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future. The lower the reading we get, the better the news for mortgage shoppers.

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Unknown

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Overall, Friday is likely to be the most active day for rates due to the Fed's preferred inflation readings being released. The calmest day may be Wednesday unless the auction results show a terribly weak or overly strong investor demand. It should be a relatively active week for mortgage rates, so please keep an eye on the markets if closing in the near future and still floating an interest rate.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

New Home Sales

Durable Goods Orders

Consumer Confidence Index

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

GDP Rev 1 (month after initial)

Personal Income and Outlays

Univ of Mich Consumer Sentiment (Rev)

none

Float / Lock Recommendation