Indexes Affecting Rate Lock

Medium

Positive

Stock Influences

Yesterday’s stunning reversal in the major stock indexes only raised more concern about the future direction of equities. At the time of posting our Thursday morning commentary the Dow and Nasdaq were both up over 500 points but eventually closed the session with losses of 386 and 486 points respectively. This is relevant for mortgage rates because fear in the stock market often leads to a shift of funds into bonds as investors seek safety from the sell-off. As investors purchase bonds, their prices rise and their yields move lower. Mortgage rates tend to track bond yields, meaning an extended sell-off in stocks should lead to lower rates for borrowers.

Medium

Negative

Univ of Mich Consumer Sentiment (Rev)

Today’s only relevant economic data was November’s revised Index of Consumer Sentiment from the University of Michigan at 10:00 AM ET. They announced a reading of 51.0 that was a little higher than the preliminary reading of 50.3 from earlier this month. The increase means surveyed consumers felt better about their own financial situations than previously thought and, by theory, are likely to spend more. Since stronger consumer spending fuels economic growth, the reading is unfavorable for mortgage rates.

Medium

Positive

Fed Talk

This morning’s early gains in both stock and bonds may be a result of comments from Federal Reserve Bank of New York President Williams’ comments during a speech in Chile. He clearly stated he feels there is room for another Fed rate cut in the near future and that he is more concerned about the softening employment sector than the current trend in inflation. That boosts the chance of seeing a third cut this year at the December 9-10th FOMC meeting.

High

Unknown

Retail Sales

Next week brings us plenty of economic data to drive bond trading and mortgage pricing, some of which are highly important reports that were delayed by the government shutdown. There is nothing of importance scheduled for Monday, leaving weekend headlines or stock selling to likely be the cause if there is a noticeable change in rates. The calendar includes September’s Producer Price Index and Retail Sales reports that usually have a strong influence on rates, but were delayed and are now aged. More recent updates on different aspects of the economy are also coming next week, such as the Fed’s preferred inflation readings. It will be a holiday-shortened week with the markets closed Thursday followed by early closings Friday afternoon. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Stock Influences

Univ of Mich Consumer Sentiment (Rev)

Fed Talk

Retail Sales

Float / Lock Recommendation