Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Low

Positive

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

Yesterday’s 7-year Treasury Note auction went much better than Monday’s 5-year Note sale. The benchmarks in the results pointed to a stronger demand for the 7-year Notes compared to 5-year Notes, especially from international buyers. However, bonds showed little reaction to the news. They had already rallied from their morning levels before the 1:00 PM ET results announcement and moved modestly after it was made. Accordingly, we are labeling the auction neutral for mortgage rates since it had no impact on pricing.

Medium

Negative

Iran War Headlines

There is no relevant economic data set for release today. The bond market is reacting to the Iran war news that looks to have expanded after Saudi Arabia was involved in the most recent military action. They assisted the U.S. in attacking Iran-back groups inside Iraq, fueling concerns that the conflict may turning into a broader regional war that everyone supposedly wanted to avoid. As a result, oil prices are up again, fueling inflation worries just as the Fed decides what to do with key rates today.

High

Unknown

Federal Open Market Committee (FOMC) Statement

This week’s FOMC meeting will adjourn, and the post-meeting statement will be released, at 2:00 PM ET. This meeting does not include revised economic projections or key rate predictions from individual members (aka dot-plot), leaving just the official statement and the 2:30 PM ET press conference with Chairman Warsh to drive trading this afternoon.

High

Unknown

Federal Open Market Committee (FOMC) Statement

There is a consensus that the Fed will leave key short-term rates unchanged today, but there is more of a chance of a rate hike at this meeting, or at least a signal from them that one is coming soon, than there has been in quite time. Recent inflation data has been cooperative in terms of the direction it has moved, but still remains well above the Fed’s preferred annual pace of 2.0%. This month’s flare up of the war with Iran has pushed oil prices higher, leading to an increase in costs at the gas pump that has reignited inflation concerns going forward. These factors could be used as justification for the Fed to bump key rates higher to help bring inflation down faster than it would do without help from the Fed. Just how much volatility and the direction it will push mortgage rates depends on what traders take away from the statement and press conference.

High

Unknown

Gross Domestic Product (GDP)

Tomorrow has three morning economic reports set for release, two of which are considered major releases. In addition to the weekly unemployment update we will also get June’s Personal Income and Outlays report that includes the Fed’s preferred PCE inflation readings and the initial Gross Domestic Product (GDP) reading for the 2nd quarter. All three are set for an 8:30 AM ET release. These will be addressed in this afternoon’s update to this report that will be posted shortly after the markets have an opportunity to react to today’s Fed events.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Iran War Headlines

Federal Open Market Committee (FOMC) Statement

Federal Open Market Committee (FOMC) Statement

Gross Domestic Product (GDP)

Float / Lock Recommendation