• This week is all about the Fed with the markets primarily focused on the FOMC meeting midweek and not much else to drive trading before or after.

 • We have only one quarterly economic report scheduled and the Thursday morning weekly unemployment update. In addition to those releases, there also are two Treasury auctions that may affect mortgage rates during afternoon trading two days.

 • Tomorrow is one of the two days with nothing of relevance scheduled.

 • The first of the two Treasury auctions will take place Tuesday when 10-year Notes will be sold. 30-year Bonds will be sold Thursday. Results of both will be posted at 1:00 PM ET each day, making them early afternoon events. If they are met with a strong demand from investors, we should see strength in the broader bond market and improvements in mortgage pricing during afternoon hours those days.

 • Our sole relevant quarterly economic report will come Wednesday morning when the 3rd Quarter Employment Cost Index (ECI) is released at 8:30 AM ET. This previously delayed data tracks employer costs for salaries and benefits during the July through September months. Rapidly rising costs raise wage inflation concerns that spread to other parts of the economy and hurt bond prices. It is expected to show an increase in costs of 0.9%. A smaller than expected increase would be good news for mortgage rates.

 • The big news of the week will come from the last FOMC meeting of the year that will adjourn Wednesday afternoon. Analysts are mostly expecting the Fed will cut key short-term interest rates by a quarter-point at this meeting, but the decision is unlikely to be unanimous.

 • Generally speaking, a quarter-point cut should be a non-factor for the markets since it is so widely expected due to rising concerns about the employment sector. If that is indeed what they do, traders will be focused on what Chairman Powell and friends are likely to do going forward.

 • By theory, bad news for bonds and mortgage rates would be the Fed holding key rates at current levels. Failing to lower them would be a clear sign that they are more concerned about inflation rising than the softening labor market. Stronger inflation makes long-term securities, such as mortgage-related bonds, less attractive to investors because it erodes the value of the bond’s future fixed interest payments.

 • That said, it is very important to remember what happened following the previous two rate cuts this year. The afternoon of the September and October FOMC meetings and the following morning both brought a sizable upward move in rates despite getting quarter-point Fed rate cuts. It would be prudent to consider that pattern if still floating an interest rate ahead of this week’s meeting.

 • The FOMC meeting will adjourn at 2:00 PM ET Wednesday. This is also when they will release their post-meeting statement and announce their revised economic projections (including the dot-plot that predicts where key rates will be in the future). Those will be followed by a press conference with Chairman Powell at 2:30 PM ET.

 • Overall, Wednesday is clearly the most important day of the week for rates. Either tomorrow or Friday may be the calmest day, assuming something unexpected doesn’t happen.

 • We are expecting to see a very active week for the bond market, leading to plenty of movement in mortgage rates. Accordingly, please proceed cautiously if still floating an interest rate since we could see them end the week far from tomorrow’s opening levels.

 • Visit our Daily Commentary page on our site for detailed explanations on current news that is relevant to mortgage rates.

 

 

 

CLICK HERE to view full detailed report and recommendations

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.