Don Grimes

This holiday shortened week brings us the release of six important economic reports or news releases. Two of the six are considered to be of fairly high importance to the bond market and mortgage pricing. The remaining reports are considered to be of moderate importance to the markets. The financial and mortgage markets are closed today in observance of the Memorial Day holiday and will reopen tomorrow morning.

The Conference Board will start the week's releases by posting their Consumer Confidence Index (CCI) at 10:00 AM tomorrow. This is one of the more important releases of the week because is measures consumer willingness to spend.

The National Association of Realtors will give us the Existing Home Sales report Wednesday morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a small increase in sales between March and April.

We will get two monthly reports Thursday morning. The more important of the two is April's Durable Goods Orders data. If it shows a smaller than expected rise, we could see rates improve Thursday morning.

April's New Home Sales data will be released late Thursday morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing. It is expected to show a small increase in sales.

The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released at 8:30 AM Friday. The second revision to this report comes next month but isn't expected to have much of an impact on the financial markets. If the upward revision is stronger than expected, we may see the bond market react negatively and mortgage rates move higher.

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. It is forecasted to show little change from this month's preliminary reading of 67.9. An upward revision would be considered a negative for bonds.

Overall, I think we have a busy week ahead of us. With the markets closed today, Tuesday's data will set the tone for the first part of the week. The big reports of the week are Tuesday's CCI and Thursday's Durable Goods. If Friday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. There are also a couple of Treasury auctions that are worth noting. The 5-year sale Wednesday and the 7-year auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. There is a pretty good possibility of seeing mortgage rates change several times this week, so 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...

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 two pieces of economic news in addition to the minutes from the last FOMC meeting. Neither of the economic reports can be considered of high importance to the markets and mortgage rates, so we may see a fairly calm week for mortgage rates.

April's Housing Starts is the first data of the week but is the less important of the two.starts. But, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

There is no relevant economic news scheduled for release Wednesday, but we will get to see the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted duri ng the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about when the Fed may make another move to help the economy.

The last data comes late Thursday morning with the release of April's Leading Economic Indicators (LEI) at 10:00 AM ET. This A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.

Overall, I think it will be a fairly calm week for mortgage rates, at least compared to last week. We could see little movement in rates if the stock markets remain calm and the week's data doesn't reveal any major surprises. The FOMC minutes may lead to some volatility in the markets, but neither of the economic reports are of great concern.

Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility in bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.

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

Lock 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.

There are several important pieces of economic news scheduled for release this week, but three stand out above the others. There are a total of six reports scheduled, so it can be considered a fairly active week. There is no relevant data due out tomorrow, so expect the stock markets to help drive bond trading and mortgage rates.

The first important piece of data is the release of April's Retail Sales early Wednesday morning. This is an extremely important report for the financial markets as it measures consumer spending.

The second important report of the week is April's Producer Price Index (PPI) early Thursday morning, which helps us measure inflationary pressures at the producer level of the economy.

There are three relevant reports scheduled to be posted Friday. The first is the week's most important. April's Consumer Pr ice Index (CPI) will be posted at 8:30 AM. It is similar to Thursday's PPI report, but measures inflationary pressures at the more important consumer level of the economy. Its results will be watched closely and can lead to significant volatility in the bond market and mortgage pricing. Current forecasts are calling for no change in the overall index and a 0.1% increase in the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices.

April's Industrial Production is Friday's second relevant report. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.6% decline in production, indicating that manufacturing activity is slowing rapidly. A larger decline in output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is weaker than expected.

The last report of the week is May's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 65.0, which would be little change from last month's final reading. If it shows a decline in consumer confidence, bond prices will likely rise, assuming the CPI does not give us a significant surprise.

Overall, it likely will be a pretty active week for mortgage rates. Besides the week's important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the CPI. But Wednesday is important due to the Retail Sales report. I am expecting to see several noticeable changes to rates this week, and would not be surprised to see multiple intra-day revisions also. Accordingly, please be attentive to th e markets 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 is very light in terms of the number of economic releases that are scheduled to be posted. However, we may still have an active week in the markets and mortgage rates due to the importance of the data that is being released and the other events on the calendar. There are only two reports scheduled that are worth watching, but one of them is highly important to bonds and mortgage rates.

The first event of the week will be testimony of Fed Chairman Bernanke as he speaks before a Joint Economic Committee Tuesday morning. The topic will be the economy and the Fed's outlook for future activity. Market participants will be watching his words closely, which means that we will likely see some volatility in trading as he speaks.

The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rising, the bond market should react favorably.

Friday brings us the release of the almighty Employment report, giving us April's employment statistics. This is where we may see a huge rally or major sell-off in the bond market and large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be a larger than expected increase in the unemployment rate and more payrolls lost during the month than was expected.

Just how much of an improvement or worsening in rates depends on how much variance there is between forecasts and actual readings. This could turn out to be a wonderful day in the mortgage market, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for an 8.9% unemployment rate and approximately 620,000 jobs lost during the month.

In addition to this week's economic data, we also have Treasury auctions that can influence bond trading and affect mortgage rates. The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday.

Overall, I am expecting to see a fairly active week in mortgage rates. Tomorrow will probably be the l ightest day with no relevant data or events scheduled, but expect to see movement in rates multiple days this week. Tuesday's speech and Friday's Employment report will heavily influence trading, likely making them the most important days. However, Thursday's data and Treasury auction may also lead to noticeable changes in rates. Accordingly, I would strongly recommend maintaining contact with your mortgage professional the next few days 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...

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 packed with relevant economic news in addition to another FOMC meeting. All seven of the reports are considered to be at least moderately important while several are considered very important to the markets and mortgage rates. This makes it likely that we will see plenty of movement in mortgage pricing over the next several days.

The first report comes late Tuesday morning when the Consumer Confidence Index (CCI) for April will be released. It is expected to show a reading of 28.8, which would be an increase from March's 26.0 reading.

Wednesday brings us the release of a very important report along with the FOMC meeting results. The report is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Wednesday and therefore the mortgage market also. Analysts are expecting to see a decline in output at an annual rate of 4.9%. A larger decline would be ideal for mortgage rates. But, a stronger than expected reading would alm ost certainly cause stock prices to rise and bond prices to fall, leading to higher mortgage rates Wednesday morning.

This week's FOMC meeting will begin on Tuesday but will not adjourn until Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement.

The next report of the week is the 1st Quarter Employment Cost Index (ECI) Thursday morning, which tracks employer costs for wages and benefits.We may see wage inflation concerns cause the bond market to fall and mortgage rates to rise. A smaller than expected increase would be good news for the bond market and mortgage pricing. Current forecasts are showing a rise of 0.5%.

March's Personal Income & Outlays is the second of two reports due to be posted Thursday morning. The lower the reading, the better the news for bonds for both portions of the report.

There are three reports scheduled for release late Friday morning. The first is the University of Michigan's update to their Index of Consumer Sentiment for April. This report gives us an indication of consumer sentiment. I don't expect it to have a significant impact on bonds and mortgage pricing unless it varies greatly from forecasts Current forecasts are c alling for a small downward revision to 61.5.

The second is March's Factory Orders data at 10:00AM. This is a fairly important release because it measures manufacturing sector strength. It is similar to last week's Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a larger decline than the 0.7% that is expected could push mortgage rates slightly lower, while a smaller drop will likely lead to higher rates. But, the third report of the morning is the most important and will likely be the biggest influence on bond trading Friday.

The Institute for Supply Management (ISM) will post their manufacturing index la te Friday morning. This is one of the first important economic reports released each month and gives us an indication of manufacturer sentiment. It is expected to show a reading of 38.0.

Overall, look for plenty of movement in the financial markets and mortgage rates this week. Wednesday will likely be the most important day of the week with the GDP being posted along with the FOMC adjournment, but we may see noticeable changes to rates Friday also. If this week's reports reveal weaker than expected economic conditions, the bond market should rally and mortgage rates should fall significantly for the 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...

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.