Wednesday’s bond market has opened in negative after this morning’s economic data showed stronger than expected readings. The stock markets are in positive ground with the Dow up 98 points and the Nasdaq up 20 points. The bond market is currently down 6/32, but I am expecting to see a slight improvement in this morning’s mortgage pricing due to strength in bonds late yesterday.

The Commerce Department posted September’s Retail Sales figures early this morning, announcing a 1.5% decline in sales from August’s level. This was a smaller than expected drop, indicating that consumers spent more than many had thought. Even if more volatile auto-transactions are excluded, sales exceeded expectations. This is bad news for bonds and mortgage rates because consumer spending makes up two-thirds of the U.S. economy. The stronger than expected spending fuels economic growth at a faster pace than forecasts are calling for.

Later today we will get to see the minutes of the most recent FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed’s next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher this afternoon. However, if they indicate that inflation is still not a threat and that a rate increase is not likely in the in the near future, the bond market and mortgage rates should remain fairly calm.

Tomorrow morning brings us another major economic release. September’s Consumer Price Index (CPI) will be released during early trading. It measures inflationary pressures at the consumer level of the economy and is one of the most important reports that the bond market gets each month. Analysts are expecting to see a rise of 0.2% in the overall index and an increase of 0.1% in the core data reading. The core data reading is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase in the core reading could raise inflation concerns in the bond market and push mortgage rates higher tomorrow. However, a smaller than expected reading should lead to lower mortgage rates. This is one of the most important reports we see each month, so its impact on mortgage rates could be significant.

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... Lock if my closing was taking place over 60 days from now...