Don Grimes

There are only three pieces of economic data scheduled to be posted this week along with a couple of Treasury auctions and relevant speeches from highly important speakers. Only one of the three reports are considered to be of high importance while one is moderately important. The third is not considered to be of much importance unless it varies greatly from forecasts.

President Obama will address the nation on national television. He will likely speak about his economic recovery plan amongst other important topics. What he says may heavily influence trading the following morning. It is very difficult to predict whether the markets are likely to react favorably to his words or negatively. But I am expecting to see volatility Tuesday morning.

Fed Chairman Bernanke will be speaking before the House Financial Services Committee Tuesday at 1:00 PM ET. He is expected t o testify and update the panel on the Fed's liquidity injections and future plans. His words could create movement in the markets and possibly mortgage pricing during afternoon trading.

The most important of the three reports this week is Thursday's release of January's Retail Sales data. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If Thursday's report reveals weaker than expected sales, the bond market should thrive and m ortgage rates will fall. However, a stronger reading than the expected unchanged level of sales could lead to higher mortgage rates. Current forecasts are calling for a decline in sales of 0.3%.

Overall, it is difficult to peg a particular day as the most important of the week. Tuesday will be quite interesting with the reaction to President Obama's words from Monday evening and Fed Bernanke's testimony on the Fed's attempts to stabilize the financial system. The single most important piec e of economic news comes Thursday, so that day needs to be given much weight also. Throw in the fact that there is an early close Friday due to the President's Day holiday next Monday, and we have the makings of an interesting week ahead of us.

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 extremely busy in terms of economic data scheduled for release and will likely be another active week for mortgage rates. The number of releases is actually irrelevant due to the importance of the some of the reports. There are eight economic releases scheduled for the week in addition to the first Federal Open Market Committee (FOMC) meeting of the year. All but two of the releases scheduled are considered to be of moderate or high importance, meaning we should see quite a bit of movement in mortgage rates again this week.

The first report of the week is tomorrow's release of December's Existing Home Sales. It gives us a measurement of housing sector strength by tracking sales of newly constructed homes. It is one of the week's least important reports, therefore, it will likely not have a significant impact on bond trading or mortgage rates. Current forecasts are calling for a small decline in sales.

January's Consumer Confidence Index (CCI) will be released Tuesday morning. This report is considered to be of high-importance to the bond market and therefore can move mortgage rates.

There is no factual economic data scheduled for release Wednesday, but we will get the results of this year's first FOMC meeting. It will begin Tuesday and adjourn at 2:15 PM ET Wednesday. It is expected to yield no change to short-term interest rate, but as is often the case, traders will be looking for any indication of the Fed's next move. However, I am not expecting this meeting to have a major impact on the markets or mortgage rates because the Fed can't lower key rates much more. There is little chance of indicating a possible rate hike in the near future, so I don't believe that this meeting will have the influence they usually do.

December's New Home Sales report, the sister release to Monday's Existing Home Sales, will be posted late Thursday morning. It is expected to show another decline in sales of new homes, but is not important enough to heavily influence mortgage pricing.

Next up is Friday, which has three reports scheduled for release. The first of them is one of the most important reports that we see regularly. The initial reading of the 4th Quarter Gross Domestic Product (GDP) will be posted early Friday morning.

The last report of the week is the revised reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer confidence, which is thought to indicate consumer willingness to spend. I don't see this data having much of an impact on the markets or mortgage rates due to the importance of the employment index and GDP figures.

Overall, look for Tuesday or Friday to be the biggest days for mortgage rates. Friday's GDP is the single most important piece of data this week, but we may see quite a bit of movement in rates Tuesday also. If we see weaker than expected results from the most important reports, we should see rates close the week much lower than last Friday's closing levels. If the data shows stronger than expected results, we may see mortgage rates move higher again this week. This is of course, assuming that the Fed meeting doesn't reveal any surprises. I strongly recommend that fai rly constant contact is maintained with your mortgage professional this week if still floating an interest rate.

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 holiday-shortened week brings us the release of only one monthly economic report for the markets to digest and it is not considered to be of high importance. This will likely leave the stock markets to be a major influence on bond trading and mortgage rates a good part of the week. Whether this is good or bad news for bonds depends if stocks rally or fall. If stocks move higher, bonds will likely suffer, leading to higher mortgage rates. However, if stocks show weakness, funds may shift into bonds, driving mortgage rates lower.

The financial markets are closed on Monday in observance of the Martin Luther King Holiday. They will reopen Tuesday morning for regular trading hours. I don't believe many mortgage lenders will be open tomorrow, but any that are will likely use Friday's rates or not allow a rate to be locked tomorrow.

Tuesday is Inauguration Day and while I don't believe the ceremony or President Obama's speech will directly affect the m arkets or mortgage rates, it does bring in the new administration, new policies and new theories. Those changes could come into play in the coming weeks and likely influence mortgage rates. Issues such economic stimulus and recovery along with tax and deficit news could create significant volatility in the markets and therefore mortgage pricing.

The week's only relevant monthly economic data is December's Housing Starts report early Thursday morning, but I don't see it causing much movement in mortgage rates. This report gives us an indication of housing sector strength and future mortgage credit demand, but it is not considered to be a heavy influence on bond trading.

Also Thursdays is the Labor Department's weekly update on unemployment filings. They are expected to show that 548,000 new claims were filed last week. A smaller number is considered negative for bonds while a larger than expected rise is positive. But, this data is also not considered t o be of high importance. Since it is one of the only two reports released at all, it may influence trading some but not enough to greatly affect mortgage rates.

Overall, I am expecting a relatively quiet week in the mortgage market. As long as the stock markets remain fairly calm, mortgage rates will probably close the week close to Tuesday's opening 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... T

his 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 pieces of economic data to digest. There is no relevant data scheduled for release tomorrow or Tuesday, but there is very important data scheduled for release each of the three remaining days.

December's Retail Sales data is the first important data and it comes early Wednesday morning. A larger drop would be good news for bonds and mortgage rates.

The second report of the week will be released by the Labor Department early Thursday morning. Current expectations are calling for a 1.9% drop in the overall reading and a 0.1% increase in the core data.

There are three relevant reports on the agenda for Friday. Weaker than expected readings should lead to bond improvements and lower mortgage rates Friday.

December's Industrial Production report is the second report to be posted Friday. A larger than expected drop would be good news and should lead to lower mortgage rates Friday as long as the CPI doesn't reveal any surprises.

The final report of the week is January's preliminary reading to the University of Michigan's Index of Consumer Sentiment. Good news would be if it shows a reading weaker than the 60.0 that is expected. However, it is the week's least important of the five releases and probably will have little impact on Friday's mortgage rates due to the importance of the CPI and production reports.

Overall, Wedn esday, Thursday or Friday may end up being the most important day of the week. The single most important report is the CPI, but the PPI and Retail Sales reports are also considered to be of high importance and can heavily influence the markets. Therefore, I strongly recommend maintaining contact with your mortgage professional, especially the latter part of 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...

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 bring us the release of only two monthly reports that are relevant to the bond market and mortgage rates. However, in addition to those two reports, we also will see the minutes from the last FOMC meeting and a couple of Treasury auctions that may influence bond trading and possibly mortgage rates.

The first of the two reports will be posted late Tuesday morning when the Commerce Department releases November's Factory Orders data. This report generally does not have a huge impact on the bond market or mortgage rates, but it can influence bond trading enough to create a minor change in rates.

Also Tuesday will be the release of the minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. The final report of the week comes Friday morning when the Labor Department will post December's employment figures. The Employment report is considered to be one of the most important monthly releases we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Rising unemployment, a larger than expected drop in new payrolls and a small increase or even a decline in earnings would be good news for the bond market.

Overall, the key data of the week will be Friday's Employment report, but look for Tuesday to be important with the economic data, FOMC minutes and one of the two more important Treasury auctions. If they give us favorable results, mortgage rates will likely move lower for the week. But if not, we will probably see mortgage rates move higher again.

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 guarante ed to be in the best interest of all/any other borrowers.