Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

Consumer Price Index (CPI)

Activities begin at 8:30 AM ET Wednesday with the release of the highly important Consumer Price Index (CPI) for May that measures inflationary pressures at the consumer level of the economy. This data is watched closely and has the potential to lead to significant volatility in the bond market and mortgage pricing if it shows a major surprise. Rising inflation makes a bond's future fixed interest payments less valuable to investors and makes the Fed less likely to lower key short-term rates. Forecasts have the overall index rising 0.2% for the month while the more important core data that excludes volatile food and energy costs is expected to rise 0.3%. Annual readings are predicted to rise a little from April’s year-over-year rate. Weaker than expected readings would be very good news for mortgage rates.

Medium

Unknown

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

Also Wednesday is the first relevant Treasury auction of the week. Results of the day's 10-year Note auction will be posted at 1:00 PM ET. If investor demand was high for these securities, we may see bonds rally during afternoon trading. However, weak interest in these types of sales often lead to bond selling and an increase in mortgage rates. This process will be repeated when 30-year Bonds are sold Thursday.

High

Unknown

Producer Price Index (PPI)

Thursday has another big inflation reading in addition to the weekly unemployment update. May's Producer Price Index (PPI) will be released at 8:30 AM ET. It is the sister release of Wednesday's Consumer Price Index (CPI), except it tracks producer or wholesale inflation. As with the CPI, this version has two headline readings that traders will be watching. Forecasts for this report mimic the CPI with the overall reading rising 0.2% and core data up 0.3%. Weaker inflation numbers are good news for bonds and mortgage pricing.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

The University of Michigan will close out this week's limited data when they announce their preliminary Index of Consumer Sentiment for June late Friday morning. This index is a measure of consumer willingness to spend. Waning confidence in personal financial and employment situations usually translates into softer levels of consumer spending, restricting economic growth. A weaker reading than May's final 52.2 would be an indication that consumers are less confident in their own finances and be labeled good news for rates. Analysts are expecting to see it come in at 53.0.

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Unknown

none

Overall, Wednesday is the most important day of the week for rates due to the significance the CPI carries in the markets, followed by the afternoon auction results. The calmest day will likely be Tuesday unless something unexpected happens. Because of the Fed’s mandatory two-week quiet period ahead next week’s FOMC meeting, we won’t have Fed speeches to fill the gaps in this week’s calendar. The little that is being released this week has the potential to cause a big swing in the markets. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Consumer Price Index (CPI)

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

Producer Price Index (PPI)

Univ of Mich Consumer Sentiment (Prelim)

none

Float / Lock Recommendation