Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Neutral

FOMC Meeting Minutes

Wednesday afternoon’s release of the minutes from this month’s FOMC meeting made it clear that the Fed is ready to take stronger action to control inflation than many had thought prior to reading them. They showed that some members feel that not only will they need to be more aggressive with bond tapering, but they may need to also start raising key short-term interest rates sooner than previously thought.

Medium

Positive

FOMC Meeting Minutes

The bond market actually responded positively after the minutes were posted. With inflation high and seeing the bond market react negatively to inflation-related data recently, some may wonder why that would be. The reason is quite simple. It is because the Fed and the bond market share a common preference- controlled inflation. Maximum employment and stable inflation/prices make up the Fed’s dual mandate and bonds are more attractive to investors when inflationary pressures are low. In other words, both the Fed and the bond market need inflation to remain under control. So, when the Fed is ready to act against that threat, it is actually good news for the bond market and mortgage rates in the long-term. We saw that theory drive trading Wednesday afternoon.

High

Positive

COVID-19 Matters

There is no relevant economic data being posted today. Causing this morning’s bond rally is news from Africa that there may be a new strain of COVID rapidly spreading that appears to be immune to current vaccinations. Fears of how quickly that would be able to spread as seasonal activities tend to head indoors, and the impact it could have on the global economy, has stocks in selling mode and bonds as a safe haven this morning. This issue will obviously be watched very carefully in the coming weeks.

Medium

Unknown

Holiday Schedule

We will get an early close in the markets today with stocks set to close at 1:00 PM ET and bonds closing at 2:00 PM ET. The pandemic news is definitely worthy of a strong reaction in the markets, but there is a possibility that it is so strong because of the holiday schedule. Many traders are home for the long weekend, creating what we call thin trading, which allows larger moves to relevant events and news than we normally would see. In other words, don’t be surprised to see bonds give back some of this morning’s gains by the end of the shortened day or Monday morning. This is a good opportunity to lock an interest rate, especially if closing in the very near future.

Medium

Unknown

None

Next week has a handful of economic reports scheduled for release, including some highly important data such as the ISM manufacturing index and the monthly Employment report. Monday has nothing of importance scheduled, but every other day has at least one item being posted. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

FOMC Meeting Minutes

FOMC Meeting Minutes

COVID-19 Matters

Holiday Schedule

None

Float / Lock Recommendation