Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Neutral

Personal Income and Outlays

This morning’s first economic release was January’s Personal Income and Outlays report at 8:30 AM ET. It revealed that personal income rose 0.6% while spending Rose only 0.2%. The income reading was higher than expectations of up 0.4% and spending came in slightly lower than expectations. The larger than expected increase in income is bad news, but the fact that consumers actually spent less than thought is good news for bonds and mortgage rates. Therefore, we can consider the report's mixed or neutral for mortgage rates.

Medium

Neutral

University of Michigan Consumer Sentiment (Rev)

The University of Michigan's revision to their Index of Consumer Sentiment for February was posted at 10:00 AM ET, revealing a 101.0 reading. That was nearly unchanged from the initial reading of 100.9, meaning surveyed consumers were just as optimistic about their own financial situations than estimated earlier this month. Good news for rates would have been a softer reading.

High

Positive

Economic impact of the Coronavirus

Even though this morning’s data gave us mixed results, the fact is that the data was not going to have a role in the markets this morning. Once the overnight losses in stocks and bond gains picked up momentum, the data became irrelevant to today’s trading. The fear of what impact the coronavirus is going to have on the global economy is the sole force behind today’s volatility. Major stock indexes were setting record highs last week, but this week is their worst since the financial meltdown in 2008. Some analysts are predicting that central bankers (Federal Reserve here in the U.S.) will need to start taking action to offset the impact the crisis is going to have on the global economy and to help settle the financial markets.

High

Positive

Bond Trends

How low will stocks and bond yields go? There is no way to know. We are setting a new record low again today in the benchmark 10-year Treasury Note yield. While yields have dropped considerably, mortgage rates have not moved as quickly. That is because even though rates do track bond yields in direction, they often move at a slower pace than government securities. Rates are actually priced off of Mortgage Backed Securities (MBS), which are more complex securities than the 10-year Treasury Note that we quote here. Treasury yields are also more accessible to the general public. The good news is that when yields tend to track upward, mortgage rates often lag behind then also. It will be interesting to see what the immediate future brings for the markets and mortgage pricing, but it is safe to say that the volatility is not over yet, especially as we get more and more news of the virus spreading.

Medium

Unknown

None

Next week doesn’t have a large number of economic reports set for release, but a couple of them are considered to be extremely important to the markets. None of the reports are set for Monday. As we have seen this week though, economic data isn’t always the focus of the markets. Weekend news, specifically news related to the coronavirus crisis, can also heavily influence the financial and mortgage markets.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Personal Income and Outlays

University of Michigan Consumer Sentiment (Rev)

Economic impact of the Coronavirus

Bond Trends

None

Float / Lock Recommendation