Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Unknown

Industrial Production

First up is February's Industrial Production report that is set for a 9:15 AM ET release tomorrow morning. This report is a measure of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is predicted to show production rose 0.2% from January's level. A decline would be considered favorable news for bonds and mortgage rates because it would indicate manufacturing sector weakness. Broader economic growth is more difficult when manufacturing activity is softening and bonds are more attractive to investors during times of weaker economic activity.

Medium

Unknown

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

There is no relevant economic data set for Tuesday, but it does have a 20-year Treasury Bond auction taking place. Results of the sale will be announced at 1:00 PM ET, making this an afternoon event for rates. If it draws a strong demand from investors, we could see bonds improve during early afternoon trading, possibly leading to a slight downward revision to mortgage pricing. On the other hand, weak interest in the securities could cause an upward revision to rates Tuesday afternoon. Last week's long-term debt auctions drew mixed results with one being poor and the other above average.

High

Unknown

Producer Price Index (PPI)

Wednesday has two morning reports scheduled, followed by an afternoon of Fed events. February's Producer Price Index is another important inflation reading, set for release at 8:30 AM ET Wednesday. This is the sister release to the Consumer Price Index except it measures inflationary pressures 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 CPI, 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 posted late Wednesday 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 0.4% rise in new orders, indicating minor 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 related jump in oil costs has affected their outlook for 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 Wednesday, especially if 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.

Low

Unknown

New Home Sales

January's New Home Sales report is Thursday’s only monthly release and the week’s final economic data. This is the least important release this week and is the sister report to last week's Existing Home Sales data. It also measures housing sector strength and mortgage credit demand but covers such a small portion of all home sales. Therefore, it usually does not have a significant impact on bond trading or mortgage rates unless it shows a significant surprise. Thursday's report is expected to show a drop in sales of newly constructed homes, hinting at weakness in the new home portion of the housing sector. The smaller the number of sales, the better the news for bonds and mortgage rates.

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Unknown

none

Overall, the most important day for rates is clearly Wednesday due to the inflation data and FOMC events. The calmest day could be Friday unless some unexpected news hits the wires. We are expecting to have another highly volatile week for the financial and mortgage markets. Therefore, please keep a close on them if still floating an interest rate and closing in the near future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Industrial Production

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

Producer Price Index (PPI)

Factory Orders

Federal Open Market Committee (FOMC) Statement

Misc Fed

New Home Sales

none

Float / Lock Recommendation