Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Neutral

Durable Goods Orders

We had three pieces of economic data posted this morning. The most important of the group was September’s Durable Goods Orders that revealed a 1.8% rise in new orders for big-ticket products such as airplanes, appliances and electronics. This was a bit stronger than forecasts, but the data is known to be volatile from month to month. In other words, the variance from forecasts isn’t nearly as meaningful as it would be in many other reports. Furthermore, a secondary reading that excludes more costly and volatile airplane and transportation related orders rose 0.5% when it was expected to be up 0.6%. These numbers allow us to label the report neutral for mortgage rates.

Medium

Negative

Consumer Confidence Index

Next in importance level and release time was October's Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced a surprisingly high reading of 91.7. This was noticeably higher than September’s upwardly revised 84.2 and a large variance from expectations of 81.0. The unexpected jump signals surveyed consumers felt much better about their own financial situation this month than they did last month. Since rising confidence usually translates into stronger levels of consumer spending that fuels economic growth, this report is bad news for bonds and mortgage rates.

Low

Neutral

New Home Sales

Finally, September's New Home Sales report showed sales of newly constructed homes fell 0.6% last month. While softer sales indicate weakness in the new home portion of the housing sector, it was a smaller than expected decline. Because this report covers such a small portion of all home sales in the U.S. and we have not seen a reaction to the news, we are labeling the report neutral for mortgage rates.

Low

Unknown

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

There is also 5-year Treasury Note auction taking place today with results set to be made available at 1:00 PM ET. Because this sale is for shorter-term securities and mortgage rates are based on long-term debt, we aren’t expecting to see a noticeable reaction to the results announcement. Good news would be a strong demand from investors, but unless the benchmarks point to an extremely strong or weak sale, we likely will see a minimal impact on this afternoon’s rates- at best.

High

Unknown

Federal Open Market Committee (FOMC) Statement

Tomorrow doesn’t have any economic data that we need to be worried about, but it does have the second-to-last FOMC meeting of the year adjournment. The consensus is that Chairman Warsh and friends will keep key short-term interest rates unchanged this week to allow more time for their previous quarter-point hike to have an impact on inflation. They also tend to avoid making changes right before an election unless there is a strong need. Still, there is a chance that we could get a surprise bump with oil prices and other economic factors keeping inflation much higher than the Fed’s preferred 2.0% annual pace. The meeting will adjourn at 2:00 PM ET tomorrow. Their written post-meeting statement will also be released at 2:00 PM ET while the press conference with Chairman Warsh will start at 2:30 PM ET. This meeting does not include revised economic projections or their dot plot of key rate predictions.

Rate Lock Advisory