Wednesday’s bond market has opened fairly flat as this morning’s inflation data didn’t surprise many traders. Stocks are in negative ground, but most likely due to news of more military action with Iran. The Dow has lost 164 points and the Nasdaq is down 10 points. The bond market is currently down 1/32 (4.52%), which with gains late yesterday should improve this morning’s mortgage rates by approximately .125 of a discount point.

This morning’s major economic news came from the release of May’s Consumer Price Index (CPI) that showed consumer level inflation rose further last month, touching its highest annual rate since April 2023. The monthly overall reading rose 0.5% while the more relevant core data that excludes volatile food and energy costs was up 0.2%. Forecasts had them up 0.5% and 0.3% respectively. On an annual basis, the core reading moved up to a 2.9% pace. With exception to the slightly softer than predicted monthly core reading, there were no big surprises in the release. Even though the headline annual numbers are concerning for the bond market, they were expected. Accordingly, we are seeing a muted response to the data.

We also have the results of today’s 10-year Treasury Note auction to watch for. If the 1:00 PM ET results announcement indicates there was a strong demand for the securities, we could see bonds improve this afternoon enough to cause a small intraday improvement in mortgage pricing before the end of the day. However, if the results point to a waning appetite for long-term debt, which mortgage rates are based on, we could see rates move higher this afternoon. This scenario will be repeated tomorrow when 30-year Treasury Bonds are sold.

Tomorrow also has the sister release of today’s CPI set to be posted. May’s Producer Price Index (PPI) that measures inflationary pressures at the wholesale level of the economy rather than consumer inflation will be released at 8:30 AM ET. Analysts are expecting the overall PPI to have risen 0.7% and the core data up 0.5%. Both readings are expected to rise on a year-over-year basis also. While the consumer readings are considered to be a little more influential than tomorrow’s wholesale numbers, tomorrow’s version is still highly important because price pressures at the wholesale level of the economy are likely to eventually be passed on to consumers. Therefore, weaker than expected readings in the PPI would be good news for bonds and mortgage rates.

Last week’s unemployment figures will also be posted early tomorrow morning. They are expected to show 218,000 new claims for jobless benefits were made last week. This would be a decline from the previous week’s 225,000 initial filings. Declining claims are a sign of strength in the employment sector, so good news for bonds and mortgage rates would be an unexpected increase.

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.