Rate Lock Advisory

Wednesday, April 8th

Wednesday’s bond market has opened in positive territory following last night’s Iran headlines. As one would expect, stocks are reacting strongly to the news to push the Dow higher by 1,283 points and the Nasdaq up 625 points. The bond market hasn’t had as strong of a response as stocks, but it is still up 9/32 (4.26%). This should allow an improvement in this morning’s mortgage rates of approximately .375 - .500 if compared to Tuesday’s early pricing.

9/32

Bonds

30 yr - 4.26%

1,283

Dow

47,867

625

NASDAQ

22,643

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Positive

Geopolitical/Financial Issues

While there is no relevant economic data being released this morning, there are still some major headlines to drive trading. Last night’s announcement that the U.S. and Iran have agreed to a two-week ceasefire and that the Strait of Hormuz will reopen for shipping traffic has oil prices down considerably, causing the bond and stocks markets to rally. This appears to be only a short-term peace deal but the expected surge of traffic through the Strait will allow gas prices to fall in the very near future. That should ease inflation concerns, at least temporarily, which is very good news for the bond market.

Medium

Unknown

None

This afternoon’s scheduled events likely won’t have anywhere near the impact on the markets and mortgage rates as last night’s news is having this morning. Still, we could see further movement later today, especially if the results of these events are favorable for rates since there already is positive momentum this morning.

Medium

Unknown

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

First up will be the results of today’s 10-year Treasury Note auction at 1:00 PM ET. These types of sales give us an indication of investor demand for long-term securities. That is relevant because mortgage rates are based on long-term debt. If the benchmarks point to a strong demand from investors, we could see bonds extend this morning’s gains shortly after the results announcement, possibly leading to a slight intraday improvement in rates. A soft or weak demand from investors could lead to a negative reaction in the broader bond market but shouldn’t derail this morning’s rally. This scenario gets repeated tomorrow when 30-year Bonds are sold.

Medium

Unknown

FOMC Meeting Minutes

The minutes from last month's FOMC meeting will be released at 2:00 PM ET to give us insight into the Fed's current thought process and individual Fed member opinions regarding future monetary policy actions, particularly how the Iran war and spike in oil prices will affect what they do with key short-term rates in the coming months. This meeting took place well before March’s strong Employment report last Friday, so any reference to that sector in the minutes may not be as meaningful any longer.

Medium

Unknown

Personal Income and Outlays

We have three economic releases set for tomorrow morning- a weekly, a monthly and a quarterly report, all coming at 8:30 AM ET. The most important of the three will be February's Personal Income and Outlays report that helps us measure consumer ability to spend and current spending habits. If income is rising, consumers are more likely to make additional purchases in the near future. Therefore, weaker than expected readings would be good news for bonds and mortgage rates. Forecasts are currently calling for a 0.3% rise in February's income and a 0.5% increase in spending.

High

Unknown

Inflation News

However, what makes this report so influential are the Personal Consumption Expenditures (PCE) indexes in it that are the Fed's preferred inflation gauges. It is the PCE readings that have the potential to make this report a market-mover. Forecasts show both the overall and the more important core PCE readings rising 0.4% for the month. The weaker the readings, particularly year-over-year, the better the news for mortgage rates. It is worth noting that this report covers the period before the Iran conflict began, meaning the spike in oil and gas costs won’t be reflected in the results.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow’s second release will be last week’s unemployment update that is expected to show 210,000 new claims for jobless benefits were filed. This would be an increase from the previous week’s 202,000 to hint the employment sector weakened a bit last week. Good news for bonds and mortgage rates would be a larger than predicted number of initial claims.

Low

Unknown

GDP Rev 2 (month after Rev 1)

The second revision to the 4th Quarter Gross Domestic Product (GDP) will close tomorrow’s batch of data. The GDP is the total of all goods and services produced in the U.S. and is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 0.7% during the last three months of the year, unchanged from the previous estimate that was announced last month. Analysts are now more concerned with the upcoming preliminary reading of the current quarter than data from three to six months ago. Accordingly, unless we see a significant revision and the PCE readings show no surprises, this report probably will have little impact on mortgage rates.

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.

Taurus Mortgage Corporation

Est. 2011

333 City Boulevard West, 17th Floor
Orange, CA 92868
Equal Housing LenderEqual Housing Opportunity
Taurus Mortgage Corporation a California Corporation ~ Est. 2011, is Licensed by the California Department of Real Estate [Corporation License No. 01900252] Nationwide Mortgage Licensing System and Registry [NMLS Company ID: 571097] Taurus Mortgage Corporation fully supports the principles of the Equal Housing Lender and Equal Housing Opportunity Act. All Rights Reserved - 2020
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