Indexes Affecting Rate Lock

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ISM Service Index

Unlike most Mondays, we do have a piece of data coming tomorrow to start this week’s calendar. March's non-manufacturing index from the Institute for Supply Management (ISM) will be posted at 10:00 AM ET. This is the sister release to last week's manufacturing index, tracking executive sentiment about business conditions in the services sector instead of manufacturing. Predictions have the index at 55.5, down a little from February's 56.1. A decline means fewer surveyed executives felt business improved last month than those who did the previous month, signaling slower economic activity. An increase would be bad news for bonds and mortgage rates while a smaller than expected reading could lead to lower rates tomorrow morning.

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Durable Goods Orders

Durable Goods Orders for February will be released early Tuesday morning, giving us insight into the manufacturing sector by tracking new orders at U.S. factories for big-ticket items. These are products such as electronics, refrigerators and airplanes that are expected to last at least three years. Analysts are expecting to see a 0.5% rise in new orders. It is worth noting that this data is known to be quite volatile from month to month, so large swings in the headline reading are common and won't be as meaningful as it would be in most other reports. Good news for mortgage rates would be a noticeably large decline.

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

Wednesday doesn’t have any economic data scheduled that we need to be concerned about, but does have two afternoon events that have the potential to move rates. The results of the day's 10-year Treasury Note auction will be announced at 1:00 PM ET. A strong demand from investors would be good news for bonds and mortgage rates. It will be interesting to see if investors are drawn to the securities or if oil and inflation worries will keep them away. This scenario will be repeated Thursday afternoon when 30-year Bonds are sold.

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FOMC Meeting Minutes

The minutes from last month's FOMC meeting will be released at 2:00 PM ET Wednesday. Market participants will be looking at them closely as they give us insight to the Fed's current thought process and individual Fed member opinions regarding future monetary policy actions, particularly how the Iran war and spike in oil prices will affect what they do with key short-term rates in the coming months. This meeting took place well before March’s strong Employment report last Friday, so any reference to that sector in the minutes may not be as meaningful any longer.

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Personal Income and Outlays

Thursday has a monthly and quarterly report for the markets to digest, both set for an 8:30 AM ET release. The more important of the two will be February's Personal Income and Outlays report at 8:30 AM ET that helps us measure consumer ability to spend and current spending habits. If income is rising, consumers are more likely to make additional purchases in the near future. Therefore, weaker than expected readings would be good news for bonds and mortgage rates. Forecasts are currently calling for a 0.3% rise in February's income and a 0.5% increase in spending.

What makes Thursday’s first report so important are the Personal Consumption Expenditures (PCE) indexes in it that are the Fed's preferred inflation gauges. It is the PCE readings that have the potential to make this report a market-mover. Forecasts show both the overall and core PCE readings rising 0.4% for the month. The weaker the readings, particularly year-over-year, the better the news for mortgage rates. It is worth noting that this report covers the period before the Iran conflict began, meaning the spike in oil and gas costs won’t be reflected in the results.

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GDP Rev 2 (month after Rev 1)

Also early Thursday morning the second revision to the 4th Quarter Gross Domestic Product (GDP) will be posted. The GDP is the total of all goods and services produced in the U.S. and is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 0.7% during the last three months of the year, unchanged from the previous estimate that was announced last month. Analysts are now more concerned with the upcoming preliminary reading of the current quarter than data from three to six months ago. Accordingly, unless we see a significant revision and the PCE readings show no surprises, this report probably will have little impact on Thursday's mortgage rates.

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Consumer Price Index (CPI)

Friday morning has another major inflation reading that is highly influential to the financial and mortgage markets. This is when March's Consumer Price Index (CPI) will be posted, giving us key inflation readings at the consumer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data. The core data carries more significance to market participants because it excludes more volatile food and energy prices. Forecasts show the overall rising 0.7% and the core reading up 0.3% with annual readings rising at a strong pace. If the report shows prices are rising faster than expected, especially on an annual basis, we should see bond prices fall and yields move higher to cause an increase in mortgage rates.

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Factory Orders

February's Factory Orders report is Friday's second release. It is similar to Tuesday'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 0.2% 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.

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Univ of Mich Consumer Sentiment (Prelim)

The initial University of Michigan's Index of Consumer Sentiment for April will close out this week's calendar late Friday morning. This index will give us an idea of consumer confidence that hints at consumers' willingness to spend. This is relevant because consumer spending makes up over two-thirds of the U.S. economy. Good news would be a sizable decline from March's final reading. The lower the reading, the better the news for rates.

Overall, Thursday or Friday are the best candidates for most important day for rates due to the release of highly important inflation data those days. Wednesday morning will likely be the calmest, even though there are two afternoon events that may influence rates. There is little doubt that we will see a lot of movement in the financial markets and possibly mortgage rates, so it would be prudent to keep an eye on them if closing in the near future and still floating.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

ISM Service Index

Durable Goods Orders

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

FOMC Meeting Minutes

Personal Income and Outlays

GDP Rev 2 (month after Rev 1)

Consumer Price Index (CPI)

Factory Orders

Univ of Mich Consumer Sentiment (Prelim)

Float / Lock Recommendation