Market Update for the week of February 25th

This week brings us the release of eight pieces of economic data for the bond market to digest. Two of them are considered to be low importance, but we do have data being posted every day of the week. This makes it likely that we will see plenty of movement in mortgage rates the next five days.

January's Existing Home Sales report will be posted late tomorrow morning. This is one of the lesser important reports of the week, along with Wednesday's New Home Sales report. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates.

The first big report will be released early Tuesday morning when we will see the Labor Department's Producer Price Index (PPI) for January. It measures inflationary pressures at the producer level of the economy. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core dat a is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, fears of inflation may rise, hurting bond prices and leading to higher mortgage rates Tuesday morning. However, a smaller than expected increase or better yet a decline in core prices would be good news for the bond market and mortgage rates. It is expected to show a increase of 0.3% in the overall reading and a 0.2% rise in the core data.

Also Tuesday morning is the release of February's Consumer Confidence Index (CCI). This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. Since consumer spending makes up two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from 87.9 in January to 82.5 this month.

The only important data sch eduled for release Wednesday is January's Durable Goods Orders data. This data gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. A larger drop than the 4.0% that is expected would be good news for the bond market and mortgage rates. This data is quite volatile from month to month, so large swings are fairly normal.

The first of two revisions to the 4th Quarter GDP reading is scheduled for Thursday morning. Analysts' forecasts currently call for a 0.8% reading, indicating that the economy was a little stronger in the last quarter of the year than initially thought. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market.

Friday brings us the release of two relevant reports. The first is January's Personal Income ad Outlays data, which gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.2% while spending is expected to rise 0.2%. Larger increases would be bad news for the bond market and could drive mortgage rates higher. Smaller than expected increases should help push mortgage rates slightly lower Friday.

The last piece of data scheduled for release this week is the University of Michigan's revision to their Index of Consumer Sentiment for February. Current forecasts show this index revising slightly higher than previously thought. The preliminary reading was 69.6 and is now expected to stand at 70.0, indicating that consumer sentiment was stronger than previously thought. This index is important because it helps us measure consumer confidence.

Overall, look for plenty of movement in bond prices and mortgage rates this week. I think we will see the most mov ement either Tuesday or Wednesday, but several of the week's reports can cause movement in rates. This would be a good week to maintain 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... 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.