Wednesday’s bond market has opened in positive territory again after this morning’s inflation data followed suit of yesterday’s version. Stocks are showing early gains of 165 points in the Dow and 201 points in the Nasdaq. The bond market is currently up 7/32 (4.56%), which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.

June's Producer Price Index (PPI) gave us this morning’s good news by showing wholesale inflation was also much weaker than expected last month. The overall PPI reading fell 0.3% when it was expected to slip just 0.1%. The more relevant core reading that excludes volatile food and energy costs was expected to rise 0.4%, but was up only 0.2%. Both readings were revised lower for May also. On an annual basis, the readings were up 5.5% and 4.7% respectively. However, these were much softer than forecasts, indicating wholesale inflation was better than thought over the past year and the last two months. Easing inflation makes bonds more appealing to investors, allowing for mortgage rates to move lower. It also makes it harder for the Fed to raise key short-term rates.

We also have day two of Fed Chairman Warsh’s congressional testimony, speaking before the Senate Banking Committee today. He is currently speaking, but we aren’t expecting any fireworks from today’s session, especially since we got no big surprises yesterday. If something is said that draws a reaction in the markets, it will come during the Q&A portion of the proceeding.

The Federal Reserve's Beige Book report will be posted at 2:00 PM ET today, making this a mid-afternoon event for rates. It details economic activity and conditions in the U.S. by Fed region through the eyes of their business contacts. The information in this report is used to make monetary policy decisions during the Fed’s FOMC meetings. Accordingly, if there are any significant changes in conditions since the last update, we could see an afternoon move in the markets and mortgage rates. Signs of slowing economic growth and/or softer inflation would be favorable news for rates.

Tomorrow brings us the release of two economic reports at 8:30 AM ET with one being much more influential than the other. First up will be highly important June's Retail Sales report that is expected to show retail-level sales rose 0.2% last month. Because consumer spending makes up over two-thirds of the U.S. economy and bonds are more attractive to investors during weaker economic conditions, this data is watched very closely. The smaller the increase in sales, the better the news it is for mortgage rates.

Also early tomorrow morning will be the release of last week’s unemployment figures. They are predicted to show 219,000 new claims for jobless benefits were filed. This would be an increase from the previous week’s 215,000 initial filings to hint at weakness in the employment sector. Favorable news for mortgage pricing would be a large rise in new claims. That said, the sales data carries much more significance in the markets than this weekly update.

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.