Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Negative

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

Yesterday’s 10-year Treasury Note auction was a bit disappointing with the benchmarks indicating a lackluster interest in the securities. This was the first 10-year auction that drew a weak demand from investors since February, raising concerns that investor appetite for long-term securities is quickly waning. The expected government-issued supply to fund the federal deficit, combined with potential corporate debt coming to market, may outpace demand from investors. This scenario (more supply than demand) would be problematic for mortgage rates because it would likely drive bond yields higher and rates tend to track bond yields.

Medium

Unknown

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

We saw bond prices react negatively to the 1:00 PM ET results announcement before rebounding late in the day. Neither move appears large enough to have caused an intraday revision from most lenders. However, it does prevent us from being optimistic about today’s 30-year Bond auction. If it draws a similar level of interest as yesterday’s sale, we could see afternoon selling in bonds that lead to an upward revision in rates sometime after results are posted at 1:00 PM ET.

Medium

Positive

Weekly Unemployment Claims (every Thursday)

This morning’s release of last week’s unemployment figures showed 226,000 new claims for jobless benefits were made, up from the previous week’s revised 219,000 initial filings and higher than forecasts of 220,000. The increase in weekly claims is a sign of a softening employment sector, making the data good news for rates- especially since the number was higher than predicted.

Medium

Neutral

Productivity and Costs (Quarterly)

Also posted early this morning was the Productivity and Costs report for the 2nd quarter. It revealed that worker output grew at an annual pace of 2.4%, making that headline good news for rates since stronger productivity helps the economy expand without inflation concerns. However, a secondary reading in the report that is related to labor costs and wage inflation rose at a 1.6% rate instead of the expected 1.5%. Because these readings somewhat offset each other, we are labeling the report neutral for bonds and mortgage pricing.

Medium

Unknown

Fed Talk

Tomorrow doesn’t have any relevant economic data scheduled for release. There is a Fed-member speech set for late morning, but there is only a moderate chance the markets will react to what he says tomorrow. In other words, there is little to drive trading tomorrow, meaning there is a real possibility of seeing bonds and mortgage rates remain fairly calm unless this afternoon’s auction results create a strong reaction that carries into tomorrow’s session.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

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

Weekly Unemployment Claims (every Thursday)

Productivity and Costs (Quarterly)

Fed Talk

Float / Lock Recommendation