Friday’s bond market has opened in positive territory despite borderline unfavorable inflation data. Stocks are rebounding from yesterday’s sell-off also, pushing the Dow up 583 points and the Nasdaq up 288 points. The bond market is currently up 9/32 (4.93%), but heavy selling late yesterday is going to likely keep this morning’s mortgage rates approximately .125 of a discount point higher than Thursday’s early pricing. Whether or not you see an increase this morning depends on how large of an intraday upward revision you saw yesterday afternoon.

Yesterday’s 30-year Treasury Bond auction followed suit of Wednesday’s 10-year Note sale by drawing a strong demand from investors. This is good news for mortgage shoppers because mortgage rates are based on long-term debt also. However, the afternoon bloodbath in bonds made the auction results irrelevant. The driving forces of spiking oil prices and Iran conflict expanding led to a major sell-off in bonds, causing intraday rate increases on top of the morning jump in rates.

August’s Consumer Price Index (CPI) was today’s major economic release. The 8:30 AM ET report revealed consumer level inflation was close to expectations with the overall CPI rising 0.4% last month to match forecasts. The bad news came in the monthly core reading that excludes more volatile food and energy costs. It rose 0.3% when analysts were expecting to see a 0.2% increase. The annual readings didn’t show any surprises with the overall CPI holding at July’s 3.4% annual rate and the core data slowing slightly from 2.5% to 2.4%.

We did get some favorable news in today’s second release. The University of Michigan announced late this morning that their Index of Consumer Sentiment for September stands at 47.8. This was a large decline from August’s 51.7 and fell well short of predictions. The monthly decline is good news for bonds and mortgage rates because waning confidence in employment and financial situations usually translates into softer consumer spending numbers that make up a significant portion of the U.S. economy. It is not this report that is fueling this morning’s early gains in bonds though. While this report is favorable, bonds were looking to recover part of yesterday’s significant losses long before this morning’s data was posted.

Next week has just a small handful of economic reports scheduled for release, along with another Treasury auction. One of the economic releases gives us a key measurement of consumer spending and it comes the same day as the much-anticipated FOMC meeting adjourns. Wednesday is easily the most important day of the week due to the Retail Sales report and FOMC meeting that includes revised economic projections. This week’s events make a Fed rate hike highly likely at next week’s meeting. We will address that subject in detail, along with the rest of the week’s calendar, in Sunday evening’s weekly preview.

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.