Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Neutral

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

Yesterday’s 7-year Treasury Note auction didn’t go as well as Wednesday’s sale of 5-year Notes. The benchmarks we use to gauge investor demand were mixed with some showing a weak interest in the securities and others contradicting that. The good news was a higher percentage of international buyers stepped up, meaning there is still a good appetite for U.S. securities outside of the country. Bonds improved after the results were announced at 1:00 PM ET despite a grade of below average compared to other recent sales. This led to some lenders issuing an intraday improvement to mortgage rates late yesterday. However, most lenders likely opted to wait for this morning’s data to reflect that move.

High

Neutral

Inflation News

This morning’s major inflation data turned out to be anticlimactic with the readings pegging expectations. July’s Personal Income and Outlays report revealed a 0.2% increase in the monthly Personal Consumption Expenditures (PCE) index and a 0.3% rise in the core PCE that the Fed heavily relies on for monetary policy decisions. The overall PCE stood at 2.6% on an annual basis, duplicating June’s number and the year-over-year core PCE rose 0.1% from June to a 2.9% annual pace last month. All of those readings matched exactly what analysts were expecting to see. Since there were no surprises, but no declines either, we are labeling this part of the report neutral to slightly negative for bonds and mortgage rates.

Medium

Neutral

Personal Income and Outlays

The other headline numbers to come from this report showed income rose 0.4% and spending was up 0.5% last month. These increases mean consumers had more money to spend last month than in June and did spend it. These increases are not favorable for bonds and mortgage rates because they fuel economic activity. That said, both of them matched forecasts, preventing a stronger negative reaction than we have seen.

Medium

Positive

Univ of Mich Consumer Sentiment (Rev)

The University of Michigan closed this week’s calendar at 10:00 AM ET with the release of their revised Index of Consumer Sentiment for August. They announced a small downward revision from the preliminary estimate of two weeks ago (58.2 vs 58.6) to indicate consumers were slightly less comfortable with their own financial situations than previously thought. This can be considered good news for rates because waning confidence usually translates into softer consumer spending numbers. Unfortunately, it wasn’t enough of a change to offset the overnight weakness and early morning data that have bonds in negative ground this morning.

High

Unknown

ISM Index (Institute for Supply Management)

Next week starts off with the markets closed for the Labor Day holiday and will open Tuesday morning. There is no early closing today ahead of the holiday. The rest of the week doesn’t have a high number of economic reports scheduled for release, but they do include the traditional new month data such as the ISM manufacturing index and governmental Employment report that are known to be quite influential. These will be the final versions of the reports before the Fed’s September 16-17th FOMC meeting. June’s Employment report last month caused quite a stir with much weaker than expected numbers and significant downward revisions to previous payroll numbers. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

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Unknown

none

We also would like to take this opportunity to wish all of our readers a safe and wonderful holiday weekend!

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Inflation News

Personal Income and Outlays

Univ of Mich Consumer Sentiment (Rev)

ISM Index (Institute for Supply Management)

none

Float / Lock Recommendation