Rate Lock Advisory

Thursday, May 13th

Thursday’s bond market has opened in positive territory despite strong gains in stocks and unfavorable economic news. Stocks are rallying during early trading, pushing the Dow higher by 411 points and the Nasdaq up 197 points. The bond market is currently up 8/32 1.67%, but weakness late yesterday is still going to cause a small increase to show in this morning’s mortgage rates. If you saw an intraday upward revision Wednesday afternoon as the bond selling picked up momentum, you should see an improvement in pricing this morning.



30 yr - 1.67%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



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

Yesterday’s 10-year Treasury Note auction actually went pretty well with the benchmarks showing a decent level of interest in the securities. Unfortunately, it wasn’t strong enough to offset the heavy selling that came in reaction to much stronger than feared inflation data earlier in the day. Today’s 30-year Bond auction gives us something to look forward to this afternoon. If results of it at 1:00 PM ET are similar to yesterday’s sale, we may see gains in bonds, and possibly mortgage pricing, later today.



Producer Price Index (PPI)

April's Producer Price Index (PPI) was posted at 8:30 AM ET this morning, revealing a 0.6% rise in the overall reading and a 0.7% jump in the more important core data. Both readings were stronger than expected, but closer to forecasts than yesterday’s CPI readings. As with yesterday’s data, stronger readings indicate inflationary pressures are rising quicker than thought, making them bad news for bonds and mortgage rates. Fortunately, the markets have not reacted to the news like they did yesterday.



Weekly Unemployment Claims (every Thursday)

Also posted early this morning was last week’s unemployment figures. They showed 473,000 new claims for benefits were filed last week, down from the previous week’s revised 507,000 and a little lower than the 490,000 that was expected. Declining weekly claims is a sign that the employment sector is strengthening, meaning we can consider this news to be slightly unfavorable for rates.



Retail Sales

The week closes tomorrow with three economic releases, starting with the highly important Retail Sales report for April. This is extremely relevant data because it measures consumer spending that makes up over two-thirds of the U.S. economy. Analysts are expecting a 1.0% increase in sales from March to April. A smaller increase should push bond prices higher and mortgage rates lower tomorrow morning as it would be a sign the economy is not as strong as thought. Bad news for rates would be a larger increase in sales.



Industrial Production and Capacity Utilization

Tomorrow’s second piece of data will be April's Industrial Production report at 9:15 AM ET. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts show a 0.9% rise in production, indicating that manufacturing activity is rebounding. This report is considered to be moderately important, so it will likely need to show a noticeable variance from forecasts to cause movement in mortgage rates.



University of Michigan Consumer Sentiment (Prelim)

The final report of the week is going to be May's preliminary reading to the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET. This index measures consumer willingness to spend that relates to consumer spending. If consumers are more confident in their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 90.2, up from April's final reading of 88.3, indicating consumers are a little more confident than last month. If it shows a decline in confidence, bond prices could rise and mortgage rates may move slightly lower because waning confidence means consumers are likely to spend less, restricting economic growth.

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.

English French German Portuguese Spanish

Michael Skovron PA Skovron Group

Our Passion is Building Happiness Through Extraordinary Experience

2800 Weston Road, Suite 103
Weston, FL 33331