Thursday’s bond market has opened in negative territory. Stocks are mixed with the Dow up 65 points and the Nasdaq down 174 points. The bond market is currently down 7/32 (4.58%), which should cause an increase in this morning’s mortgage rates of approximately .125 of a discount point.

Yesterday afternoon’s release of the Fed Beige Book showed no major surprises. Eleven of the Fed’s twelve districts reported slight or moderate growth in overall economic activity. Business contacts said they expect the growth to continue, but several stated there was some uncertainty due to high fuel costs. Five of the districts said the employment situation improved while seven indicated little or no growth in employment activity. And on the inflation front, all districts said prices continue to rise, albeit at different paces. In short, the lack of any significant changes kept the reaction to the report minimal. In other words, the news had no impact on yesterday’s mortgage rates.

This morning big news was the release of June's Retail Sales report at 8:30 AM ET. It revealed a 0.2% increase in consumer spending to match most predictions. A secondary reading that excludes more volatile and costly auto transactions fell 0.2% when it was expected to slip 0.1%. Since consumer spending makes up over two-thirds of the U.S. economy and bonds tend to thrive in weaker economic conditions, June’s readings allow us to label the report neutral to slightly favorable for rates.

Today’s second report was last week’s unemployment update, also coming at 8:30 AM ET. It showed 208,000 new claims for jobless benefits were made last week, down from the previous week’s revised 216,000 initial filings. This is bad news for bonds and mortgage rates because the week-over-week decline is a sign of strength in the employment sector. Forecasts had the weekly number rising.

The week’s calendar closes tomorrow morning with three moderately important economic releases. First will be June’s Housing Starts report at 8:30 AM ET that will give us an indication of housing sector strength and future mortgage credit demand. However, it doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. This month's release is expected to show an increase in new home groundbreakings. The lower the number of starts, the better the news for the bond market even though the data will probably have little impact on mortgage pricing.

June's Industrial Production data will be posted at 9:15 AM ET tomorrow. It measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. Forecasts show an increase of 0.2% from May's production, signaling the manufacturing sector was modestly stronger last month. This report is far from the most important manufacturing report we get each month, so at best we can expect it to have a modest impact on rates. Good news for mortgage pricing would be a decline.

The final economic report of the week will be the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET. This index is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted tomorrow and is expected to show an increase from June's final reading of 49.5. This would mean surveyed consumers are more optimistic about their own financial and employment situations this month than they were last month. It is believed that if consumer confidence in their own finances is rising, they are more apt to make a large purchase in the near future. And with consumer spending making up such a large part of our economy, investors pay close attention to reports such as these. Accordingly, a decline in confidence would be good news for mortgage rates because it means many consumers are likely to delay making large purchases, limiting economic growth.

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.