Indexes Affecting Rate Lock

Medium

Negative

General Bond Trends

We don’t have any relevant economic data set for release today. This leaves us to believe this morning’s bond losses are still being driven by high oil prices that fuel inflation and an expanding Middle East conflict. The benchmark 10-year Treasury Note yield touched 5.02% during overnight trading, a level that hasn’t been seen since 2003. Since mortgage rates usually track bond yields, we have also seen rates move to their highest level since May of last year. With no end in sight for the Iran war, relief hopefully will come from the Fed at this week’s FOMC meeting that adjourns tomorrow.

Medium

Unknown

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

We do have a 20-year Treasury Bond auction taking place today that has the potential to influence rates slightly this afternoon. If the sale is met with a strong demand from investors like last week’s long-term security sales were, bond prices may rise and mortgage rates could revise modestly lower after results are announced at 1:00 PM ET. On the other hand, a lackluster interest in the securities may create selling in the broader bond market that leads to an upward revision to mortgage rates during afternoon trading. However, by no means are we expecting this sale to have a strong impact on rates. Traders are focused much more on current geopolitical events, inflationary pressures and what the Fed may do tomorrow to help.

High

Unknown

Retail Sales

Tomorrow is going to be extremely interesting. It will start with the release of August's Retail Sales report at 8:30 AM ET. This report will give us details about consumer spending, which is highly important to the markets because that category makes up over two-thirds of the U.S. economy. If consumer spending is strong, overall economic growth is likely to be stronger, making bonds less attractive to investors. If we see weaker than expected readings in this report, the bond market should respond favorably, pushing mortgage rates a little lower. Current forecasts show a 0.8% increase in sales. Good news for the bond market and mortgage pricing would be a much smaller increase, or better yet- a decline.

High

Unknown

Federal Open Market Committee (FOMC) Statement

That takes us to the highly-anticipated FOMC meeting events tomorrow afternoon. Not too long ago, there was plenty of debate regarding whether or not the Fed would raise key short-term interest rates before the end of the year. Last week changed those odds drastically. The significant spike in oil prices that has one benchmark above $105 per barrel, the fact the Iran war not only has no end in sight but is now expanding to other countries in the Middle East and inflation data that didn’t ease concerns drove bond yields to a high point we haven’t seen in many years.

High

Unknown

Federal Open Market Committee (FOMC) Statement

The chance of a Fed rate hike coming tomorrow is now very high. If the Fed does bump key rates this week to bring inflation down, it will be the first hike since July of 2023 and indicate the Fed is being hawkish, or being attentive to inflation. The Federal Reserve raises rates when they want to slow economic activity and bring inflation down, while lowering them is intended to boost economic growth when it is too slow. We are in a situation where spending needs to be slowed to ease inflation in the economy.

High

Unknown

Misc Fed

It is important to remember that the Fed’s goals are in line with what the bond market wants to see also. Rising inflation makes a long-term bond’s future fixed interest payments less appealing to investors today. This is why bond prices have been moving lower, pushing their yields (and mortgage rates) higher. If the Fed is successful in bringing inflation back down closer to their 2.00% target rate, bonds should thrive and mortgage rates would move lower. In other words, don’t be surprised to see a bond rally and mortgage rates revise lower tomorrow afternoon if the Fed does take action and more importantly, signals they are prepared to raise key rates further if needed to bring inflation down. However, if they don’t make a move this week for some reason, we could see bond yields and mortgage rates rise higher than they are today.

High

Unknown

Misc Fed

The meeting will adjourn at 2:00 PM ET tomorrow, which is also when we will get their post-meeting statement and revised economic projections. Those economic projections also include the Fed's so-called Dot Plot that tells us where individual Fed members think these short-term rates will be in the future. This is another way the Fed is telling us what they think will happen to key rates in the future. It is safe to assume we will see a great deal of volatility in the markets and mortgage rates tomorrow afternoon, so be prepared if still floating an interest rate.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

General Bond Trends

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

Retail Sales

Federal Open Market Committee (FOMC) Statement

Federal Open Market Committee (FOMC) Statement

Misc Fed

Misc Fed

Float / Lock Recommendation