Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Positive

Weekly Unemployment Claims (every Thursday)

The first of this morning’s economic releases was last week’s unemployment update at 8:30 AM ET. It revealed 209,000 new claims for jobless benefits were filed last week, down a tad from the previous week’s upwardly revised 210,000 initial filings. That revision of 10,000 to the previous week’s claims was notable in size. Even though we are now left with a small decline in new claims, the higher numbers allow us to label the report favorable for bonds and mortgage rates.

Low

Neutral

Productivity and Costs (Quarterly)

Revised 3rd quarter worker productivity numbers were also posted early this morning. There were no revisions to the previous estimates of a 4.9% pace of productivity and a 1.9% decline in a secondary reading that tracks labor costs. With this data aged now and no revision to their initial readings, this data was a non-factor for this morning’s mortgage pricing and bond trading.

Medium

Neutral

Factory Orders

November’s Factory Orders came in stronger than expected to hint at manufacturing sector strength. This morning’s report showed a 2.7% increase in new orders for durable and non-durable goods when forecasts pointed to a 1.3% increase. Fortunately, this report is also old now, allowing bond traders to put little weight in the data. As a result, it has had no influence on this morning’s mortgage rates.

Low

Unknown

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

There is a 7-year Treasury Note auction taking place today that may have a minor impact on rates this afternoon. Results of the sale will be announced at 1:00 PM ET. If they indicate there was a strong demand from investors, we could see bonds improve slightly during early afternoon trading. Because these are mid-term securities and not long-term debt, if there is a reaction later today, it should be modest and have a minimal impact on mortgage pricing.

High

Unknown

Producer Price Index (PPI)

Tomorrow brings us the most important economic release of the week. December’s Producer Price Index (PPI) will be posted at 8:30 AM ET, giving us some insight into inflationary pressures at the wholesale level of the economy. The threat of rising inflation is the primary reason the Fed is hesitant to make further cuts to key short-term interest rates. Predictions have the overall PPI rising 0.2% and the more important core reading that excludes volatile food and energy costs up 0.3%. On an annual basis, both are expected to retreat a little from November’s 3.0% pace. Smaller than expected increases would be very good news for long-term securities such as mortgage-related bonds, leading to lower rates tomorrow morning.

Rate Lock Advisory