Wednesday’s bond market has opened in positive territory in somewhat of a relief move that today’s inflation data didn’t come in stronger than it did. Stocks are mixed again with the Dow down 16 points and the Nasdaq up 157 points. The bond market is currently up 6/32 (4.66%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

This morning’s big news was the release of July's Consumer Price Index (CPI) that showed no surprises. It revealed a 0.1% increase in the overall reading and a 0.2% rise in the core data that excludes food and energy costs. On an annual basis, the overall reading grew at a 3.4% annual pace while the core reading was at 2.5%. Both of the year over year numbers were down 0.1% from June’s rate. All of these readings matched expectations, indicating consumer level inflation grew modestly last month and slowed similarly from this time last year. We are seeing a positive response to the data because it did not come in stronger than expected.

We also have today’s 10-year Treasury Note auction to watch that will tell us how investors feel about long-term debt right now. Results of the sale will be posted at 1:00 PM ET, making this an early afternoon event for rates. If the results point to a strong demand from investors, particularly international buyers, we could see bonds extend this morning’s gains during afternoon trading. That could lead to a slight downward revision to mortgage rates before the end of the day. On the other hand, a lackluster interest could lead to broader selling in the bond market that may push mortgage rates higher. This scenario will be repeated tomorrow when 30-year Bonds are being auctioned.

Tomorrow brings us another important inflation reading along with the weekly unemployment update. July’s Producer Price Index (PPI) will tell us inflationary pressures at the wholesale level of the economy rather than this morning’s consumer reading. Analysts are predicting an increase of 0.2% in the overall index and a rise of 0.3% in the core data for July with annual rates falling more than this morning’s version showed. Good news for rates should be softer readings both monthly and annually, partly because stronger wholesale inflation often carries into the consumer level of the economy eventually.

Also early tomorrow will be the release of last week’s unemployment figures. They are expected to show 202,000 new claims for jobless benefits were filed, up from the previous week’s 199,000 initial filings. Rising claims are a sign of weakness in the employment sector, meaning a larger than predicted number would be favorable for mortgage rates.

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.