Thursday’s bond market has opened in positive territory to erase yesterday afternoon’s weakness. Stocks are showing early gains with the Dow up 227 points and the Nasdaq up 114 points, despite more military action between Iran and the U.S. The bond market is currently up 8/32 (4.52%), which should keep this morning’s mortgage rates close to Wednesday’s early pricing. If you saw an intraday increase in rates yesterday, you should see an improvement this morning of about the same size.

Yesterday’s 10-year Treasury Note auction went fairly well with the benchmarks pointing to a relatively strong demand, particularly from international buyers. We did see a negative move in bonds shortly after the results were announced at 1:00 PM ET, but that was likely coincidental and due to Middle East news hitting the wires. Since mortgage rates are based on long-term debt and the results indicate a decent appetite for them, we are labeling the auction as good news for rates even though the sale itself failed to cause an improvement in pricing. This scenario will be repeated this afternoon when results of today’s 30-year Bond auction are posted at 1:00 PM.

This morning’s release of May’s Producer Price Index (PPI) gave us mixed readings about inflationary pressures at the wholesale level of the economy. The overall PPI exceeded expectations of a 0.7% increase by a pretty good margin with a 1.1% jump for the month. However, the more important core data that excludes volatile food and energy costs rose 0.4%, falling short of the 0.5% that was predicted. On an annual basis, the overall PPI moved to a 6.5% rate, up from April’s 6.0%. Good news came in the annual core reading that slipped from April’s 5.2% pace to 4.9% for May. Forecasts had the year-over-year readings at up 6.4% and 5.4% respectively. In short, some of the wholesale inflation numbers can be labeled good news since they were under expectations, but the numbers themselves are still concerning since they are well above the Fed’s 2.0% goal and could cause the Fed to raise key short-term rates long before we see another rate cut.

Last week’s unemployment update was this morning’s second release. It revealed 229,000 new claims for jobless benefits were filed last week. This was an increase from the previous week’s 225,000 initial filings and noticeably higher than the 215,000 that was expected. Rising claims are a sign of weakness in the employment sector, allowing us to refer to this release as favorable for mortgage pricing.

The University of Michigan will close out this week's economic data at 10:00 AM ET tomorrow when they announce their preliminary Index of Consumer Sentiment for June. This index is a measure of consumer willingness to spend. Waning confidence in personal financial and employment situations usually translates into softer levels of consumer spending, restricting economic growth. A weaker reading than May's final 44.8 would be an indication that consumers are less confident in their own finances and be labeled good news for rates. Analysts are expecting to see it come in at 46.0.

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.