Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

Producer Price Index (PPI)

August's Producer Price Index (PPI) will begin this week's economic releases at 8:30 AM ET Wednesday. The PPI measures inflationary pressures at the wholesale level of the economy and can have a significant impact on the financial and mortgage markets. There are two readings in the report- the overall and core data. Core figures will draw more attention as they exclude more volatile food and energy prices. Current forecasts show a 0.3% rise in both the monthly overall and core readings. The weaker the readings, the better the news for bonds and mortgage rates.

Medium

Unknown

Fed Talk

It is worth noting that last month’s PPI update showed a spike in July’s prices and this will be the last wholesale inflation reading before next week’s FOMC meeting. In other words, while traders are expecting the Fed to cut rates next week by a quarter-point, this week’s two inflation reports have the potential to alter that vote. Noticeably softer than expected inflation readings could allow a half-point rate cut to be discussed. However, readings that point to stronger than predicted inflation may cause the Fed to leave key short-term rates unchanged for the time being.

Medium

Unknown

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

Wednesday also has the first of this week's Treasury auctions that may influence rates. 10-year Treasury Notes will be auctioned Wednesday while 30-year Bonds will go Thursday. The results of each sale will be posted at 1:00 PM ET those days. If investor demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading midweek. If the benchmarks point to weak interest in the securities could lead to selling in the broader bond market that may push mortgage rates higher.

High

Unknown

Consumer Price Index (CPI)

The PPI's sister report, the Consumer Price Index (PPI), is set for release early Thursday morning. It will give us an indication of inflationary pressures at the more important consumer level of the economy rather than the wholesale level. There are also two readings that analysts follow in this release. Analysts are expecting to see a 0.3% increase in both of them. Stronger than expected readings would be bad news for rates and could alter what the Fed does next week.

Medium

Unknown

Univ of Mich Consumer Sentiment (Prelim)

The University of Michigan's Index of Consumer Sentiment for September will close out this week's calendar late Friday morning. This index gives us an indication of consumer confidence in their own financial situations, projecting consumer willingness to spend. If a consumer's confidence in their own financial situation is rising, they are more apt to make large purchases in the near future. But if they are growing more concerned about their job security or finances, they probably will delay making that sizable purchase. This influences future consumer spending data and therefore impacts the financial markets. It is expected to show a stronger reading than August's 58.2. The lower the reading, the better the news for mortgage rates.

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Overall, Thursday is the most important day of the week for rates due to the importance the CPI carries in the markets, but surprises in Wednesday’s PPI could create a big move in the markets also. The best candidate for calmest day is Tuesday. We should see the most movement in rates Wednesday and/or Thursday with other days likely to yield minor changes in pricing. Keep an eye on the markets if still floating an interest rate and closing in the near future since they can get active without warning.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Producer Price Index (PPI)

Fed Talk

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

Consumer Price Index (CPI)

Univ of Mich Consumer Sentiment (Prelim)

none

Float / Lock Recommendation