Rate Lock Advisory

Wednesday, March 1st

Wednesday’s bond market has opened in well in negative territory in response to strong stocks gains fueled by President Trump’s speech last night. The major stock indexes are sharply higher with the Dow up 254 points and the Nasdaq up 55 points. The bond market is currently down 19/32 (2.46%). This morning’s losses, coupled with weakness late yesterday should push this morning’s mortgage rates higher by approximately .500 of a discount point if comparing to Tuesday’s early pricing.



30 yr - 2.46%







Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock



Stock Influences

This morning’s economic data wasn’t exactly bond favorable, but it is not the cause of the selling. Stocks are rallying after President Trump’s speech to congress last night was taken as extremely positive for economic growth. He is in favor of corporate tax cuts and less business regulation that are also expected to help boost corporate earnings. Accordingly, stocks are rallying today and what is positive for stocks generally is negative for bonds. Besides the economic growth concerns in the bond market, we are also seeing funds shift away from bonds and back into stocks. This doesn’t come as a surprise after the recent bond rally as it is common to see profit-taking after a quick rally.



Personal Income and Outlays

We had two pieces of economic data that was released this morning. The first was January's Personal Income and Outlays data at 8:30 AM ET. The Commerce Department reported a 0.4% increase in income and a 0.2% in personal spending. The income reading matched forecasts, but the spending came in a little light compared to the 0.3% rise that was expected. This means that consumers spent less than anticipated, making the data slightly favorable for bonds and mortgage rates. Unfortunately, it was just a small victory on an otherwise overly negative day.



ISM Index (Institute for Supply Management)

The more important data of the morning was the Institute for Supply Management (ISM) manufacturing index for February at 10:00 AM ET. It came in at 57.7, exceeding forecasts of 56.1. That means more surveyed manufacturing executives felt business improved than did in January. Because that is a sign of manufacturing sector strength, we should consider this news negative for the bond and mortgage markets.



Fed Beige Book

Later today, the Federal Reserve will release their Fed Beige Book. It will be posted at 2:00 PM ET tomorrow afternoon. This report details economic activity throughout the country by Federal Reserve region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during mid-afternoon trading. It probably will not cause a major sell off in the stock or bond markets, but it is still worth watching.



Weekly Unemployment Claims (every Thursday)

Tomorrow’s only relevant data is last week’s unemployment figures. They are expected to show that 245,000 new claims for unemployment benefits were filed last week, up from the previous week’s 244,000 initial claims. Since rising claims hints at employment sector weakness, the higher the number the better the news it is for mortgage rates. However, because this is only a weekly report and comes at the same time as two very important releases, it likely will have little impact on tomorrow’s 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... Lock 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.