Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Negative

Consumer Price Index (CPI)

September's Consumer Price Index (CPI) was this morning’s major news. It showed consumer level core inflation was a bit stronger than expected last month and over the previous year. The overall CPI matched forecasts with a 0.6% monthly jump, while the year-over-year rose from August’s 3.4% pace to 3.7% last month. However, the worst news came in the more important core readings that strip out volatile food and energy costs. Both core readings exceeded predictions (up 0.3% vs 0.2% in September and a 2.5% vs 2.6% rate annually). It is the core numbers that are raising the loudest alarms this morning, raising the possibility that the Fed may need to act at this month’s FOMC meeting rather than waiting for December’s meeting.

Medium

Unknown

Fed Beige Book

This afternoon’s release is the Federal Reserve's Beige Book report at 2:00 PM ET. It summarizes economic activity through the eyes of business contacts within each Fed region, giving the Fed insight while making monetary policy decisions at their FOMC meetings. We aren’t expecting the report to cause a major sell-off in the stock or bond markets, but it is still worth watching as it could draw enough of a reaction to change rates slightly.

High

Unknown

Retail Sales

Tomorrow morning has three pieces of economic data set for release at 8:30 AM ET, two of which are also considered to be highly influential. One is September’s Retail Sales report that gives us consumer spending data. This type of data is so important to the markets because consumer spending makes up over two-thirds of the U.S. economy. If spending is strong, overall economic growth is likely to be stronger, making stocks more appealing and bonds less attractive to investors. If we see weaker than expected readings in this report, the bond market should respond favorably, pushing mortgage rates lower. Current forecasts show a 0.3% increase in sales. Good news for the bond market and mortgage pricing would be a decline.

High

Unknown

Producer Price Index (PPI)

September’s Producer Price Index (PPI) will be tomorrow’s second release. The PPI is the sister report to today’s CPI, but tracks inflationary pressures at the wholesale level of the economy instead of the consumer level. Analysts are expecting the overall PPI to be up 0.5% while the core reading rose 0.3%. As we saw with this morning’s reaction, bond traders want to see weaker inflation readings. If tomorrow’s numbers are softer than expected, we may see an improvement in mortgage rates. On the other hand, stronger than predicted wholesale inflation could flow into the consumer level, raising CPI future CPI numbers even further.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

The final piece of data in tomorrow’s batch of reports will be last week’s unemployment figures. They are expected to show 200,000 new claims for jobless benefits were made last week. This would be a small increase from the previous week’s 197,000 initial filings to indicate slight weakness in the employment sector. Good news for rates would be a much larger number of new claims, but the morning’s other two reports carry significantly more importance in the markets than this weekly update does. A big move in rates will most likely come from one of those releases and not this one.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Consumer Price Index (CPI)

Fed Beige Book

Retail Sales

Producer Price Index (PPI)

Weekly Unemployment Claims (every Thursday)

Float / Lock Recommendation