Don Grimes

Mortgage markets were volatile last week, making it very difficult to shop for mortgage rates.

On most days, lenders issued multiple rate sheets with the trend putting rates higher in the morning, and lower in the afternoon.

Overall, mortgage rates were unchanged on the week. It broke a three-week streak through which mortgage rates rose.

Rates remain roughly one-half percent higher than the lows of early-October.

The biggest positive for rate shoppers last week was tame economic data -- specifically concerning the Producer Price Index and the housing sector.

The Producer Price Index is an inflationary, Cost of Living-like measurement for businesses and it went negative in September. Analysts weren't expecting that and the surprise pulled rates down an eighth.

Similarly, in housing, both the Home Price Index and Housing Starts figures were softer than expectations. These, too, tugged mortgage rates down.

At least temporarily.

We say "temporarily" because -- all week long -- a steadily-weakening U.S. dollar was leading mortgage rates higher.

All things equal, mortgage rates rise as the dollar loses value and, last week, the dollar touched a 14-month low versus the Euro. The greenback's weakness countered most of the "positive" news for rate shoppers and is a major reason why rates were so volatile.

The volatility should continue into this week, too. With little data and no Fed speakers, look for mortgage rates to move with the market's momentum.

Lately, momentum has been pulling rates higher so if you're floating a rate and trying to time a bottom, the chances are good that we already passed it. Consider locking your rate before rates rise much further.

Once rates break 6 percent, they may not come back down.

This week brings us the release of five economic reports that are of interest to the mortgage market along with the minutes from the last FOMC meeting. The week also gets heavy in quarterly earnings releases for companies, which could cause significant movement in the stock markets again. The earnings results could affect bond trading as investors move funds into stocks if the reports are good. The other possibility is that the earnings reports would generally disappoint, meaning investors may move funds out of stocks and into bonds as a safe-haven. The latter would be good news for the bond market and mortgage rates.

The first piece of data comes Wednesday morning when September's Retail Sales report is posted. This data is very important to the markets because it measures consumer spending by tracking sales at retail establishments in the U.S. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 2.1% decline in sales. The large drop from August's sales is expected to come from a significant decline in auto transactions since the Cash for Clunkers program ended.

Also scheduled for release Wednesday is the minutes to the last 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 Wednesday afternoon. However, if they indicate that inflation is still not a threat and that a rate increase is not likely in the near future, the bond market and mortgage rates should remain calm.

The remaining two reports are both scheduled for release Friday morning. September's Industrial Production data is the first release of the day and will be posted mid-morning. It gives us an indication of manufacturing strength by tracking orders at U.S. factories, mines and utilities. It is expected to show a 0.1% increase in output from August's level, meaning that manufacturing activity rose slightly. A larger than expected increase in output would be negative for bonds and mortgage rates while a decline should help push mortgage rates lower Friday morning.

The last report of the week is October's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. It is expected to show a reading of 74.0, up slightly from September's final of 73.5.

Overall, I am expecting to see a fair amount of movement in mortgage rates this week, but mostly the latter part of the week. The key reports are Wednesday's Retail Sales report and Thursday's CPI data. But the active week for corporate earnings can also heavily influence trading and mortgage rates any day of the week. Accordingly, please proceed cautiously if you have not locked an interest rates yet.

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... 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.

This week brings us only one monthly economic report for the markets to digest and it is not considered to be of high importance. This means that the week will be left mostly up to the stock markets and other influences since there is a lack of factual data for bonds to trade on. In addition to the one report, we also have two relevant Treasury auctions that can also cause movement in rates if demand for them is particularly strong or weak.

The first relevant event of the week is Wednesday's 10-year Treasury Note auction. a lackluster interest in the sale would likely lead to higher mortgage rates Wednesday afternoon.

The second important sale is Thursday's 30-year Bond sale. It is not as important to mortgage rates as Wednesday's 10-year Note sale is, but it is important enough to influence trading and bond market sentiment. As with Wednesday's sale, a strong demand would be good news for mortgage pricing while a weak interest may lead to upward revisions to rates Thursday afternoon.

The only factual economic data of the week will be posted Friday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates. It is expected to show a $32.9 billion trade deficit.

Overall, I suspect this is going to be fairly quiet week for the bond market and mortgage rates, especially compared to last week. For the most part, I believe the week will be left to the stock markets and the Fed auctions. The most important day of the week is likely Wednesday due to the 10-year Treasury Note sale, but any day of significant stock volatility may make that particular day the most eventful.

The bond market will be closed next Monday in observance of the Columbus Day holiday, but there will not be an early close in trading Friday. The only recognition of the holiday comes next Monday.

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.

This week brings us the release of six relevant economic reports for the bond market to digest. There is nothing of importance scheduled for release tomorrow, so look for the stock markets to influence bond trading and possibly mortgage rates. I would not be surprised to see a relatively calm day as traders prepare for this week's data, some of which is considered to be extremely important.

The first release of the week is September's Consumer Confidence Index (CCI) late Tuesday morning. This Conference Board index will be posted at 10:00 AM and gives us a measurement of consumer willingness to spend. Analysts are calling for a reading of approximately 57.0, up from August's 54.1. If we see a larger than expected increase, the bond market should move lower and mortgage rates move higher Tuesday.

Wednesday's sole report is the final revision to the 2nd Quarter Gross Domestic Product (GDP). It is expected to show a slight downward revision from the previous estimate of a 1.0% decline in GDP.

August's Personal Income and Outlays will be released early Thursday morning. It gives us an indication of consumer ability to spend and current spending habits. This is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is negative news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. It is expected to show a 0.1% rise in income and a 1.1% increase in spending due to auto sales.

The Institute for Supply Management (ISM) will post their manufacturing index for September late Thursday morning. This index gives us an indication of manufacturer sentiment. Analysts are expecting an increase from last month's 52.9 reading. The 50.0 benchmark is extremely important because a reading above that level means more surveyed executives felt business improved than those who said it had worsened. This data is important not only because it measures manufacturer sentiment, but it is also very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall Thursday morning.

The Labor Department will post September's Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added or lost during the month and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.

If this report gives us weaker than expected readings Friday, bond prices should move higher and we should see lower mortgage rates Friday. However, stronger than forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see the unemployment rate at 9.8%, a decline in new payrolls of approximately 180,000 and a 0.2% increase in earnings.

The final report of the week comes late Friday morning when the Commerce Department will post August's Factory Orders data. This manufacturing sector report is similar to last week's Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates slightly if it varies from forecasts by a wide margin, but due to the importance of the Employment report I doubt this data will heavily influence the markets. Current forecasts are calling for an increase in new orders of approximately 0.5%.

Overall, it is likely going to be a very active week in the markets and mortgage rates. The most important day will be Friday due to the employment report being scheduled, but Tuesday's and Thursday's data can also fairly heavily influence mortgage rates. With important data being released each day of the week except tomorrow, I would recommend maintaining contact with your mortgage professional.

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.

This week brings us the release of five relevant economic reports in addition to another FOMC meeting and two important Treasury auctions. None of the factual reports are considered to be highly important. In fact, most of the economic news is considered to be only moderately important. This should help limit the possibility of significant changes to mortgage rates most days this week.

The Conference Board will release its Leading Economic Indicators (LEI) for August late tomorrow morning. A larger than expected reading would be considered bad news for bonds and could lead to a minor increase in mortgage rates tomorrow.

There is nothing of importance scheduled for release Tuesday, but the first of this week's two important Treasury sales will take place Wednesday and the Fed's two-day FOMC meeting will adjourn Wednesday afternoon. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of each sale will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday.

The FOMC meeting will begin Tuesday and adjourn at 2:15 PM Wednesday. There is little possibility of seeing any type of change to key short-term interest rates. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to fi nd when the Fed's next move may come. The wild card is how the markets react to the statement because the lack of a change to monetary policy will not affect the markets. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mortgage rates Wednesday afternoon and Thursday morning.

August's Existing Home Sales report will be released late Thursday morning. The National Association of Realtors posts this data, giving us an indication of housing sector strength by tracking home resales in the U.S. It is expected to show a moderate increase from July's sales, however, this data is not considered to be of high importance to the bond market unless it varies greatly from forecasts.

The remaining three reports will all be released Friday morning. August's Durable Goods Orders will be posted early morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for an increase in orders of 0.3%. A smaller than expected increase could help bond prices and cause mortgage rates to drop Friday. However, a larger than expected rise would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.

The second report is the University of Michigan's Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 70.2 reading. Analysts are expecting to see a small upward revision, meaning consumer confidence was slightly higher than previously thought. A lower than expected reading would be good news for bonds and help improve mortgage rates Friday morning.

The final report of the week is August's New Home Sales. It is expected to show that sales of newly constructed homes rose slightly in August. As with most of this week's data, this report will likely not have a significant impact on mortgage rates unless its readings differ greatly from forecasts.

Overall, the single most important report of the week is Friday's Durable Goods Orders, but the most important day will probably be Wednesday due to the FOMC adjournment and the 5-year Treasury Note auction. Thursday's 7-year Note sale is actually a little more important for mortgage rates than Wednesday's auction but the first of the two will give us an idea of what to expect from Thursday's sale. I don't believe any of this week's data has the potential to move the markets or mortgage rates heavily. But, we may some change in rates day-to-day, with the most likely coming mid-week.

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...

Float if my closing was tak ing 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.