Don Grimes

This week brings us the release of five important economic reports for the bond market to digest. Several of these reports are considered to be of high importance, meaning we will likely see volatility in the financial markets and mortgage pricing over the next several days. There are also plenty of corporate earnings releases scheduled for the stock markets this week along with the minutes from the last FOMC meeting.

The first piece of data comes Tuesday morning with the release of June's Producer Price Index (PPI). The The bond market should react quite favorably if we get weaker than expected readings, but a larger than expected jump in the core reading could send mortgage rates higher Tuesday.

June's Retail Sales report will also be posted Tuesday. The Commerce Department is expected to say that sales at retail establishments rose 0.5% last month. A smaller than expected increase in sales could help fuel a bond rally and lead to lower mortgage rates, depending on the results of the PPI report.

Next on tap is Wednesday's release of June's Consumer Price Index (CPI). It is a mirror of Tuesday's PPI with the exception that the CPI measures inflation at the more important consumer level of the economy. Analysts have forecasted a 0.6% increase in the overall index and a 0.1% rise in the core data. The core data is also considered to be the key reading because it gives us a more stable measure of inflat ion. Higher than expected readings could raise inflation fears and push mortgage rates higher both days.

June's Industrial Production data will also be posted Wednesday morning. This data measures output and U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. It is expected to show a 0.6% decline in production, indicating that the manufacturing sector showed weakening conditions during the month. That is basically good news for bonds, however, with seasonal shutdowns and auto-related weakness likely included, a sizable decline should not surprise many.

Also worth noting about Wednesday is the release of the minutes from the last FOMC meeting. There is a possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members during discussion and voting at the last meeting or give any indication of the Fed's possible next move with mo netary policy.

There is no relevant monthly or quarterly data scheduled for release Thursday. Friday's only relevant data is June's Housing Starts report. This data gives us an indication of housing sector strength, but is not considered to be of high importance. Analysts are currently expecting to see a small decline in new starts of housing projects. However, I don't see this data having much of an impact on mortgage rates Friday unless it varies greatly from forecasts.

Overall, I think we will probably see the most movement in mortgage pricing Tuesday or Wednesday due to the importance of the economic releases those days. The week's corporate earnings also have the potential to heavily influence bond trading and mortgage rates via stock market swings. If the major earnings reports show better than expected results, we can expect to see the major stock indexes rally. This would lead to a shift of funds from bonds to stocks and in the process bonds will fall. The results would be higher mortgage rates. The other possibility is weaker than expected results from the key companies that would lead to stock selling and a bond market rally. One thing is safe bet though- it will likely be an active week for the markets and mortgage rates. Accordingly, please proceed cautiously if still floating an interest rate.

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 only two monthly economic reports for the bond market to digest and they both will be posted Friday. It also is the beginning of corporate earnings season. Those quarterly earnings reports can lead to significant volatility in the stock markets, which could influence bond trading and mortgage rates.

The first piece of economic news that may affect mortgage rates is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 610,000 new claims for benefits were filed last week.

The second monthly report is the University of Michigan's Index of Consumer Sentiment that is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted late Friday morning and is expected to rise slightly from June's final reading of 70.8. This would indicate that consumers were a little more comfortable with their own financial situations this month than last month. It is believed that if consumers are confident in their own finances, they are more apt to make large purchases in the near future. And with consumer spending making up two-thirds of o ur economy, investors pay close attention to reports such as these.

Also worth mentioning are a couple of Treasury auctions that are scheduled to take place this week. The Treasury will sell 10-year TIPS (Treasury Inflation Protected Securities) tomorrow, 10-year Notes Wednesday and 30-year Bonds Thursday. These sales can influence market trading in bonds and possibly affect mortgage rates. If the sales are met with a strong demand from investors, particularly Wednesday's sale, we should see afternoon improvements in bonds that could lead to downward revisions to mortgage rates. However, if concerns over the amount of debt being sold keeps buyers on the sidelines, we may see bonds fall after results are posted at 1:00 PM ET and mortgage rates move higher those days.

Lastly, Wednesday kicks off the earning reporting season when Alcoa posts their quarterly results. Market participants are anxiously waiting for these earnings reports to see just how h ard the weak economy is affecting earnings. Just as important as this past quarter's results are their forward-looking estimates. If revenue, earnings and projections from the big-named companies exceed expectations, stocks will likely rally, making bonds less appealing to investors. But if results are weaker than expected, indicating that the economy is still stifling earnings, bonds will be more attractive to investors as stocks slide. This could help boost bond prices and lead to lower mortgage rates.

Overall, I am expecting to see a fairly active week in mortgage rates. It is difficult to say which day will be the most important of the week. Friday is the easy candidate with two monthly reports scheduled to be posted, but neither is considered to be a major release. Wednesday is also a possibility due to the 10-year Note auction and the opening act of earnings season. I suspect that we may see some pressure in bonds the first part of the week unless the m ajor stock indexes continue Thursday's selling. If the corporate earnings reports that are scheduled for this week are a disappointment, stocks will probably move lower and investors may seek safe-haven in bonds. This would likely help push bond prices higher and mortgage rates lower for the week. But if the Treasury sales are met with a lackluster demand and earnings exceed expectations, rates will most likely finish the week higher than last week's closing levels.

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 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 only four economic reports for the markets to digest, but three of them are considered to be important and one of those three is arguably the most influential report we see each month. In addition, those four reports are being released over just three trading days. There is no relevant data scheduled for release tomorrow and the markets are closed Friday in observance of the Independence Day holiday, leaving the middle calendar days the focus of the week.

June's Consumer Confidence Index (CCI) is the first report of the week. It will be posted late Tuesday morning. If it shows a sizable increase in confidence from last month, we can expect to see the bond market falter and mortgage rates rise slightly. Current forecasts are calling for a reading o f 55.1, up slightly from last month's 54.9 reading.

The Institute of Supply Management (ISM) will release their manufacturing index for June late Wednesday morning. Analysts are expecting a reading of 44.0. That would indicate that manufacturers felt business improved slightly from the previous month. Good news for bonds and mortgage rates would be a weaker than expected reading.

The remaining two reports will be released Thursday morning. The Labor Department will post June's unemployment rate, number of new payrolls added and average hourly earnings early Thursday. 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, a large decline in payrolls and no change in earnings. Weaker than expected readings would likely help boost bond prices and lower mortgage rates Thursday. However, stronger than expected readings could be extremely detrimental for mortgage pricing. Analysts are expecting to see the unemployment rate rise 0.2% to 9.6%, while 370,000 jobs were lost and a 0.2% rise in earnings.

The Commerce Department will post May's Factory Orders data late Thursday morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference is that this week's report covers both durable and non-durable goods. It usually doesn't have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies greatly from forecasts. Current expectations are showing a 0.2% rise in new orders from April's levels. A smaller than expected rise in orders would be consi dered good news for the bond market and could help lower mortgage rates slightly Thursday. However, the employment data is much more important to the markets than this report is.

Overall, Tuesday and Wednesday's data should bring some volatility in trading and mortgage rates, but Thursday's Employment report is definitely the most important of the week. Its impact can single handily lead to an improvement or increase in mortgage rates for the week. There is no early close for the bond market Thursday as previous years, but it will probably be a light afternoon in trading as traders head home for the long weekend. This could lead to additional volatility during morning trading, so I strongly recommend that you maintain contact with your mortgage professional if still floating an interest rate.

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 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 will likely prove to be very active in terms of mortgage rate movement due to the economic data and other events that are scheduled. There are six economic reports scheduled for release, but in addition to the data another Federal Open Market Committee (FOMC) meeting will be held and another round of Treasury sales are on the calendar. Together, we have the makings of a potentially volatile week in the financial and mortgage markets.

There is no relevant economic news scheduled for release tomorrow. Tuesday brings us the first data with the release of May's Existing Home Sales report. The National Association of Realtors will give us figures on home resales. This data helps us measure housing sector strength and mortgage credit demand, but it is one of the week's less important reports. It is expected to show an increase in sales from April to May.

The only important release scheduled for Wednesday is May's Durable G oods Orders, which gives us an indication of manufacturing sector strength. It is known to be quite volatile from month to month and is expected to show a decline of 0.5% in new orders from April to May. A larger decline would be the ideal scenario for the bond market and could lead to a decline in mortgage pricing Wednesday.

Also Wednesday is the release of May's New Home Sales that is similar to Tuesday's Existing Home Sales report. This report tells us how well sales of newly constructed homes were last month. It is also expected to show a rise in sales, but will likely not have much of an impact on mortgage rates because this data is considered to be of low importance to the markets.

The FOMC meeting that begins Tuesday afternoon will adjourn Wednesday afternoon. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting. But, as we have seen so many times in the past, it i s the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy or inflation, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and possibly mortgage pricing Wednesday afternoon.

The only relevant economic data scheduled for release Thursday is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month's first revision showed a 5.7% decline in the GDP. This month's second and final revision is expected to the same decline.

May's Personal Income and Outlays data will be posted Friday morning. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

The second report of the day and the last important data of the week will come from the University of Michigan who will update their Index of Consumer Sentiment for May. An upward revision would be considered a negative for bonds.

Also worth noting is the fact that the Fed will be selling $104 billion in new debt this week. These sales may influence trading enough to affect mortgage rates. There are sales every day except Friday but the two most likely to affect rates are Wednesday and Thursday's sales. If they are met with a strong demand, we could see bond prices rise some during afternoon trading. This could lead to afternoon improvements to mortgage rates. But, the sales draw a lackluster interest from investors, mortgage ra tes may move higher during afternoon trading.

Overall, tomorrow will likely be the quietest day of the week. The most active should be Wednesday due to the importance of the data and FOMC meeting. Friday's news may also affect mortgage rates, but likely not as much as earlier days. This would definitely be a good week to maintain constant contact with your mortgage professional.

If I were considering financing/refinancing a home, I would....

Float if my closing was taking place within 7 days...

Float if my closing was taking place between 8 and 20 days...

Float 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 is fairly busy with five economic reports scheduled to be released. Two of the five are considered to be of high importance to the markets and mortgage rates. The remaining three are of interest to the markets but likely will not cause a large change in mortgage rates unless they vary greatly from forecasts.

The first data of the week comes Tuesday when there are three reports scheduled to be posted. The day's reports are a broad spectrum of data ranging from housing figures to manufacturing output to an important inflation reading. Their importance to the markets also is a wide variety. The first report of the day is May's Housing Starts that tracks starts of new home projects. It is the week's least important report and likely will not affect mortgage rates unless its results vary greatly from the 5.5% increase that has been forecasted.

The second is one of the two highly important reports of the week. May's Producer Price Index (PPI ) will also be posted early Tuesday morning. It helps us measure inflationary pressures at the producer level of the economy. There are two readings of this index, the overall and the core data. The core data is considered to be the more important of the two because it excludes more volatile food and energy prices. It will not take much of a variance from forecasts for the markets to react, which would most likely lead to changes in mortgage rates.

The third and final piece of data scheduled for Tuesday is May's Industrial Production. This report will be released at 9:15 AM ET and is considered to be moderately important. A larger than expected 0.8% decline would indicate that the manufacturing sector is weaker than expected and should help push mortgage rates lower. That is assuming that the PPI doesn't surprise us.

Wednesday's only data is the week's most important and arguably the single most important report we see each month. This is when we will get May's Consumer Price Index (CPI). Larger than expected increases will most likely lead to noticeable upward changes to mortgage rates Wednesday.

May's Leading Economic Indicators (LEI) will be posted late Thursday morning. The Conference Board, who is a New York-based business research group, will post this data. It attempts to predict economic activity over the next three to six months. If it shows rapidly rising levels of activity, bond prices will probably drop, pushing mortgage rates higher Thursday morning. But, a weaker than expected reading could lead to lower mortgage pricing. It is expected to show a 0.9% increase.

Overall, look for Tuesday to be the big day of the week. Not just because it brings the release of three of the five reports, but also because it brings us the PPI that is considered to be a key inflation reading. Wednesday is also very important with the CPI being posted, so look for the most movement in rates during the middle part of the week.

If I we re 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 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.