Market Update for February 19th

Tuesday's bond market has opened in negative territory following early stock gains. The stock markets are starting the week off fairly strong with the Dow up 86 points and the Nasdaq up 10 points. The bond market is currently down 14/32, which will likely push this morning's mortgage rates higher than Friday's rates by approximately .250 of a discount point.

Tomorrow morning brings us the release of two of this week's relevant reports in addition to a third news event. The Labor Department will release January's Consumer Price Index (CPI) at 8:30 AM ET, which measures inflationary pressures at the very important consumer level of the economy. With exception to maybe the Employment report, the CPI is the most important report that we see each month. Its results can have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.2% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.

The second report of the day is January's Housing Starts. This report gives us an indication of housing sector strength and mortgage credit demand. However, it isn't considered to be of high importance to the bond market or mortgage pricing. It likely will not affect rates unless it varies greatly from forecasts.

Tomorrow afternoon also brings us the release of the minutes from the last FOMC meeting. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading.

The third and final relevant economic data of the week is the Leading Economic Indicators (LEI) for January late Thursday morning. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.1% decline, meaning that economic activity may slow slightly in the near future. A larger than expected drop would be good news for the bond market and mortgage rates.

Overall, the most important day of the week is obviously tomorrow with the release of the CPI and the Fed minutes. It is the results of tomorrow's news and data that will likely determine of rates move higher or lower 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.