Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Unknown

Consumer Confidence Index

Starting this week's scheduled activities is the Conference Board, who will announce their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This data measures consumer willingness to spend. If the index rises, it indicates that surveyed consumers felt better about their own personal financial and employment situations than they did last month and therefore, are more apt to make large purchases in the near future. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending is such a big portion of the U.S. economy and bonds tend to thrive in weaker economic conditions. A decline in the index would be good news for Tuesday’s rates. It is expected to come in at 99.8, down from April's 101.3.

High

Positive

Debt Ceiling/U.S. Debt Default

Also worth noting about Tuesday is how the markets will react to this weekend’s news that a debt-ceiling deal has been made between the principal negotiators. It remains to be seen if the rank-and-file members of Congress will go along with the agreement. In other words, the issue and potential default has not exactly been averted quite yet. It will take a couple days for the votes in each chamber to take place before the markets can put the matter in the past. There also is a possibility that the credit rating agencies will make a downgrade or issue a warning about the rating of the United States, despite the agreement. It will be interesting to see how the markets react over the next few days. This weekend’s announcement is very good news and a big step in the right direction, but it is premature to celebrate at this time.

Medium

Unknown

Fed Beige Book

Wednesday morning doesn’t have any relevant economic data that we need to be concerned with. There is an afternoon event that may influence rates later in the day though. That is the 2:00 PM ET release of the Federal Reserve's Beige Book. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. via business contacts in each Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. Wednesday's update is expected to show weaker economic activity since the last version. If there is a reaction in the bond market or mortgage pricing, it will happen during mid-afternoon hours Wednesday.

Medium

Unknown

ADP Employment

Thursday begins the release of this week’s more influential reports. First is May's ADP Employment report at 8:15 AM ET. It tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows later in the week. Still, because we sometimes see a reaction to the report, we will be watching it. Traders are expecting it to show that 160,000 private sector jobs were added to the economy during the month. The smaller the increase in jobs, the better the news it is for mortgage rates.

Low

Unknown

Productivity and Costs (Quarterly)

Next up will be revised 1st quarter Productivity and Costs data that measures employee output and employer costs for wages and benefits. It is also considered to be moderately important because it helps us measure wage inflation. Many analysts believe that the economy can grow with low inflationary pressures when productivity is high. Last month's preliminary reading revealed a 2.7% decline in productivity and a 6.3% jump in labor costs. Thursday's update is predicted to show little change. I don't think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from expectations since it is quite aged now.

High

Unknown

ISM Index (Institute for Supply Management)

The Institute for Supply Management's (ISM) manufacturing index is one of the week's two highly important economic releases, coming Thursday at 10:00 AM ET. This report draws so much attention because it measures manufacturer sentiment about current business conditions. It is also often the first release of the month that covers the previous month, giving us fresh insight into the economy. A reading below 50 means that more surveyed manufacturing executives felt business weakened during the month than those who felt it had improved. Analysts are expecting to see a 47.1 reading in this month's release, unchanged from April. A lower reading will be good news for the bond market and mortgage shoppers while an increase could contribute to higher rates.

High

Unknown

Employment Situation

Friday morning has the monthly Employment report at 8:30 AM ET. This extremely important data will give us key employment readings such as the U.S. unemployment rate, the number of jobs added or lost during the month and average earnings change. Forecasts show the unemployment rate rose 0.1% to 3.5% this month with approximately 185,000 jobs added and a 0.3% increase in earnings. A higher than expected unemployment rate and a much smaller increase in payrolls would be favorable news for mortgage rates. Bonds are particularly sensitive to the earnings increase also, meaning the smaller the rise in that number, the better the news it is for rates. This report carries enough significance to be a market mover and may also alter the Fed’s monetary policy plans during June’s FOMC meeting.

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Unknown

none

Overall, Friday is the most important day for rates by default since it has the almighty Employment report scheduled. Thursday may also be noticeably active with the ISM report. No day stands out as a good candidate for calmest for rates, not even Tuesday because we may see volatility after the long weekend and don’t know how the markets will react to the debt-ceiling deal. It is not going to be a quiet week for rates. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Consumer Confidence Index

Debt Ceiling/U.S. Debt Default

Fed Beige Book

ADP Employment

Productivity and Costs (Quarterly)

ISM Index (Institute for Supply Management)

Employment Situation

none

Float / Lock Recommendation