Rate Lock Advisory

Tuesday, October 14th

Tuesday’s bond market has opened down slightly to hold a good part of Friday’s late rally. Stocks are giving back some of yesterday’s rebound gains, pushing the Dow down 183 points and the Nasdaq down 283 points. The bond market is currently down 1/32 (4.03%), which should allow this morning’s mortgage rates to be approximately .125 - .250 of a discount point lower than Friday’s early pricing. The bond market was closed yesterday for the Columbus / Indigenous Peoples' Holiday.

1/32

Bonds

30 yr - 4.03%

183

Dow

45,883

283

NASDAQ

22,411

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

High

Positive

Tariff News

Friday afternoon’s bond rally and huge sell-off in stocks came as a result of President Trump’s warning that he was considering a 100% tariff on all goods coming from China. As soon as the statement hit the newswires stocks tanked and bond prices moved higher (lowering yields). President Trump has since softened his stance a little, leading the markets to believe that new threat may not happen. As a result, stocks rallied yesterday, recovering more than half of Friday’s losses.

Low

Neutral

Government Shutdown

The ongoing government shutdown is preventing nearly all of this week’s scheduled economic reports from being released. In the list of scheduled releases were two highly important inflation readings and key data on consumer spending. In lieu of those reports, the markets will be relying on other headlines and Fed-member speeches to drive bond trading this week.

Medium

Unknown

Fed Talk

There is at least one Fed speech scheduled each day this week. These speeches often are about mundane topics such as community banking and global payment systems that have no impact on rates. Others have topics related to the economy or monetary policy that can affect the financial and mortgage markets. Most of this week’s speeches are of no concern. The two that stand out as likely to draw a reaction are Fed Chairman Powell’s 12:20 PM ET Economic Outlook and Monetary Policy speech at a business conference in Philadelphia today and Fed Governor Waller’s Economic Outlook speech Thursday at 9:00 AM ET in New York.

Medium

Unknown

Fed Beige Book

The week’s only relevant release will be the Federal Reserve's Beige Book report tomorrow afternoon. It summarizes economic activity through the eyes of business contacts within each Fed region. The Fed relies heavily on this data during their FOMC meetings when making monetary policy decisions, so look for a potential reaction during mid-afternoon trading. It probably will not cause a big sell-off in the stock or bond markets, but the 2:00 PM ET release is still worth watching as it could draw enough of a reaction to change rates if it reveals any major changes since the last update.

Low

Unknown

Corporate Earnings

Also worth noting is corporate earnings season starts this week, when a large number of big-named companies release their quarterly and annual earnings reports. Strong earnings are good news for stocks and bad news for bonds. Generally speaking, if earnings miss expectations, stocks should lose ground while bonds rally and mortgage rates should move slightly lower. With a number of well-known large banking and financial companies posting this week, stocks could also have a heavy influence on bond trading and possibly mortgage pricing.

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... Float 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.

Excel Funding Real Estate Services, Inc.

28924 South Western Avenue, Suite 110
Rancho Palos Verdes, CA 90275
Equal Housing Opportunity
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