Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Negative

Existing Home Sales from National Assoc of Realtors

Kicking off this week’s economic calendar was the release of May's Existing Home Sales report at 10:00 AM ET. The National Association of Realtors announced a 0.8% increase in home resales last month when forecasts showed a decline in sales. This is a sign of strength in the housing sector that makes the report bad news for bonds and mortgage pricing. Fortunately, other factors are driving bond trading this morning, ignoring this data.

Medium

Positive

Geopolitical/Financial Issues

As we mentioned in last night’s weekly preview, a lot can happen during overnight trading. Bonds looked to be responding negatively to the weekend news of the U.S. attacking Iran’s reported nuclear facilities. They reversed those losses to open in positive ground during early morning trading. This issue may continue to generate headlines, particularly if Iran retaliates against the U.S. in some way and could affect bond trading at any moment throughout the week.

Medium

Positive

Fed Talk

Another favorable headline this morning came from one of the many scheduled FOMC-member speeches happening this week. The Fed’s Vice Chair of Supervision Michelle Bowman indicated during her speech overseas that it may be time to consider cutting key short-term interest rates. She added that she is less concerned about tariffs fueling inflation right now than she is of the employment sector weakening and she would consider a rate cut at the Fed’s July FOMC meeting as long as inflation remains on a downward track. Those comments signal the Fed may be less worried about inflation rising, which is good news for long-term securities such as mortgage bonds. Softer inflation makes those securities more appealing to investors.

Medium

Unknown

Consumer Confidence Index

June's Consumer Confidence Index (CCI) is set for release at 10:00 AM tomorrow, giving us an indication of consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future. Consumer spending makes up over two-thirds of the U.S. economy, so rising confidence can contribute to overall economic growth. Forecasts are predicting a reading of 99.1, up from last month's 98.0. The lower the reading, the better the news it is for bonds and mortgage pricing.

High

Unknown

Misc Fed

Also tomorrow morning is day one of Fed Chairman Powell's two-day semi-annual testimony before Congress. He will be updating the House Financial Services Committee on the status of the economy and monetary policy, then will do so again Wednesday in front of the Senate Banking Committee. There is a good possibility of seeing the markets react to his words, possibly leading to a change in mortgage rates tomorrow. He will be speaking at 10:00 AM, followed by Q&A from the committee members. We usually see a much stronger reaction to something said during the first day of the proceedings because his day two prepared statement often is the same as the first day.

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Unknown

none

Overall, tomorrow is the most important day for rates because of the Fed Chairman’s testimony to congress. Friday’s inflation readings in the Personal Income and Outlays report may also have a heavy influence on bonds trading and mortgage pricing, as could any new Iran-related headlines throughout the week. No day stands out as an obvious choice for calmest day, but Wednesday is a good candidate. It would be quite prudent to keep an eye on the markets and newswires if still floating an interest rate and closing in the near future since we are expecting a fair amount of volatility this week.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Existing Home Sales from National Assoc of Realtors

Geopolitical/Financial Issues

Fed Talk

Consumer Confidence Index

Misc Fed

none

Float / Lock Recommendation