Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Unknown

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

Today’s only potentially mortgage rate-related event is the 20-year Treasury Bond auction. A strong demand for the securities may lead to bond gains after results are posted at 1:00 PM ET. This would indicate investors still have an appetite for long-term debt and would be considered favorable for mortgage rates. On the other hand, weak interest in the securities may contribute to an upward revision in mortgage pricing this afternoon since mortgage rates are based on long-term securities. If there is a reaction to the auction, it will come during early afternoon trading.

High

Unknown

Producer Price Index (PPI)

Tomorrow is going to be a busy day with two morning economic releases, one being a closely watched inflation reading, and an afternoon of Fed events. The day will begin with the release of February's Producer Price Index (PPI) at 8:30 AM ET. This data tracks inflation at the wholesale level of the economy. There are two primary monthly readings of the index- the overall and the core data. Both are predicted to be up 0.3% for the month. Larger than expected monthly or annual increases would be bad news for mortgage rates. However, as with last week’s consumer level data, inflation trends and predictions have been thrown out the window because of the Iran war and significantly higher oil prices this month.

Medium

Unknown

Factory Orders

January's Factory Orders report will be released at 10:00 AM ET tomorrow morning. It is similar to last Friday's Durable Goods Orders data in giving us a measurement of manufacturing sector strength, but this version includes new orders for both durable and non-durable goods. It is not one of the more important reports we get each month, however, it can influence mortgage pricing if it varies greatly from forecasts. Analysts are expecting a 0.1% rise in new orders, indicating modest strength in the manufacturing sector. The bond market would like to see a large decline, meaning that manufacturing activity was weaker than many had thought.

High

Unknown

Federal Open Market Committee (FOMC) Statement

The Fed events begin at 2:00 PM ET when the two-day FOMC meeting adjourns. It is widely expected that Chairman Powell and friends will leave key short-term interest rates unchanged at this meeting. What traders are most interested about is how the Iran war and the related jump in oil costs have affected their outlook for inflation and Fed rate cuts. There was some discussion before the war started that they may need to raise key rates before they lower them again. High oil prices certainly support that theory as they are expected to fuel inflation across the global economy.

High

Unknown

Misc Fed

Along with the adjournment and post-meeting announcement, we will also get the Fed's updated economic projections at 2:00 PM ET. These economic predictions include what is known as the dot plot that tells us each member's individual predictions for key rates. Analysts use them as the Fed's official projections for rates. The press conference with Chairman Powell will start at 2:30 PM. It is likely going to be an active afternoon in the financial and mortgage markets tomorrow, especially if their predictions alter the current plan of two rate cuts this year. Any comments or other information that indicates the Fed’s plans have changed would be bad news for bonds and mortgage rates.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

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

Producer Price Index (PPI)

Factory Orders

Federal Open Market Committee (FOMC) Statement

Misc Fed

Float / Lock Recommendation