Indexes Affecting Rate Lock

High

Positive

Retail Sales

This morning’s batch of economic releases started with May's Retail Sales report at 8:30 AM ET. The Commerce Department announced a 1.3% decline in retail level sales with a secondary reading that excludes more costly and volatile auto transactions falling 0.7%. Both readings were much weaker than expected, indicating consumers spent less last month than thought. Those headline numbers are good news for bonds and mortgage rates because softer consumer spending restricts economic growth. However, strong upward revisions to April’s readings somewhat offset May’s figures and appear to be preventing a stronger reaction to the data.

High

Negative

Producer Price Index (PPI)

Also posted at 8:30 AM ET this morning was May’s Producer Price Index (PPI). It showed that the overall PPI reading rose 0.8%, while the more important core reading that excludes volatile food and energy costs jumped 0.7%. Both readings were stronger than forecasts, pointing towards rapid inflation growth at the manufacturing level of the economy. Since bonds are sensitive to rising inflation, we can consider this report to be bad news for bonds and mortgage rates.

Medium

Neutral

Industrial Production and Capacity Utilization

May's Industrial Production report finished this morning’s economic data at 9:15 AM ET. It revealed a 0.8% increase in output at U.S. factories, mines and utilities. Forecasts were calling for a 0.6% increase from April’s output. Today’s report also showed a sizable revision for April, but this one was a downward revision that signaled production was not as strong as previously posted. This report doesn’t carry a high level of importance, so it has not had an impact on today’s mortgage rates.

Medium

Unknown

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

We also have a 20-year Treasury bond auction to watch today. Results will be posted at 1:00 PM ET, making this an early afternoon event. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates. However, if the interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher during afternoon trading.

Low

Unknown

Housing Starts (New Residential Construction)

Tomorrow has a single minor piece of economic data in the morning, followed by an afternoon of highly important Fed events. The day will start with May's Housing Starts at 8:30 AM ET that tracks groundbreakings of new home projects but is not considered to be as important as other housing reports. Market analysts are expecting to see an increase in starts of new homes last month. Good news for the bond market and mortgage rates would be a smaller increase in groundbreakings.

High

Unknown

Federal Open Market Committee (FOMC) Statement

This week’s FOMC meeting will adjourn at 2:00 PM ET tomorrow afternoon. This meeting will also include revised economic projections from the Fed. There is no chance of them changing key short-term interest rates at this meeting. However, the markets will also be looking for any indication about the Fed's future monetary policy plans, specifically about bond purchases and other moves that will affect their balance sheet or when they may start raising key short-term interest rates. Along with the adjournment and post-meeting statement, we will also get the Fed’s economic projections at 2:00 PM ET. They will be followed by a press conference with Fed chairman Powell at 2:30 PM ET. There is a relatively strong possibility of seeing afternoon volatility and possibly a change to mortgage rates mid-afternoon tomorrow.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Retail Sales

Producer Price Index (PPI)

Industrial Production and Capacity Utilization

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

Housing Starts (New Residential Construction)

Federal Open Market Committee (FOMC) Statement

Float / Lock Recommendation