Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Positive

Banking Crisis

Yesterday’s big rally in bonds and reversal of early stock gains was mostly due to a couple of news headlines that raised concerns about the stability of regional banks and credit lenders. Yesterday’s news, related to large-scale fraud at two fairly-well known lending institutions, which followed bankruptcy filings from other companies last month such as subprime auto lender Tricolor. While it is not yet known if these are isolated incidents or if it is the start of a systemic issue in the financial/credit sector, the news has raised alarms in a stock market that some analysts feel is already due to pullback from record highs. This led to a flight-to-safety move where funds were shifted into more secure government securities. This led to widespread intraday rate improvements from mortgage lenders.

Medium

Unknown

General Bond Trends

That bond rally pushed the benchmark 10-year Treasury Note yield below the important threshold of 4.00% and closed there. This morning’s weakness in bonds without any significant headlines means it is likely to move back above soon. Good news for rates would be a reversal of this morning’s selling to again close below 4.00%. Being able to stay below that level should allow for a noticeable downward trend in bond yields and mortgage rates to begin.

High

Unknown

Consumer Price Index (CPI)

Next week has much more data available to the markets compared to what the past two weeks had. This is because the government shutdown has prevented the release of many of the reports that the markets use to gauge what is happening in the economy. Several of next week’s scheduled releases come from non-governmental organizations such as the National Association of Realtors, the Conference Board and the University of Michigan. They produce economic releases that are usually considered to be moderately important. That said, some government staff are being called back to work to compile the Consumer Price Index (CPI) and release it next Friday morning because it is September’s data that will determine the annual Cost of Living Adjustment (COLA) for social security recipients. It also will give the Fed another look at inflationary pressures before their FOMC meeting the following week.

Medium

Unknown

Leading Economic Indicators (LEI) from the Conference Board

The week’s calendar begins Monday with the release of September’s Leading Economic Indicators from the Conference Board, who is a New York-based business research group. This release attempts to predict economic activity over the next three to six months. It usually doesn’t draw much attention, but the lack of other data recently may raise its influence on the financial and mortgage markets Monday. Look for details on it and all of the week’s other relevant activities in Sunday evening’s weekly preview.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Banking Crisis

General Bond Trends

Consumer Price Index (CPI)

Leading Economic Indicators (LEI) from the Conference Board

Float / Lock Recommendation