Monday’s bond market has opened down slightly with little to drive trading today other than some overseas news. Stocks are starting the week mixed with the Dow down 13 points and the Nasdaq up 104 points. The bond market is currently down 1/32 (4.21), which should keep this morning’s mortgage rates close to Friday’s morning pricing.

There is no relevant economic data being released today. There are a few Fed-member speeches scheduled throughout the afternoon, but none have topics that are expected to influence mortgage rates. This morning’s modest bond losses are likely a response to China’s suggestion that its banks pare back their U.S. Treasury security holdings. China is the third largest foreign holder of U.S. Treasuries, so the recommendation is expected to remove a little demand from the bond market, leading to this morning’s upward move in yields.

The rest of the week has five monthly and quarterly economic reports that may have an impact on bond trading and/or mortgage pricing. Three of them are considered to be highly important and can have a strong influence on rates. In addition to the data, there are also a couple of Treasury auctions that may affect rates during afternoon trading midweek.

December's Retail Sales report is the first release, set to be posted at 8:30 AM ET tomorrow. This very important data tracks consumer spending that makes up over two-thirds of the U.S. economy. It is being posted later than usual because of last year’s government shutdown. If it reveals weaker than expected retail-level sales, the bond market should rally, improving mortgage rates. Forecasts are calling for a 0.5% increase from November. Favorable results for the bond market and mortgage rates would be a much smaller rise in sales, indicating consumers spent less than thought as the year came to an end.

The 4th Quarter Employment Cost Index (ECI) will be released early tomorrow morning also. It measures employer costs for employee wages and benefits, giving us insight into wage inflation pressures. If employer staffing costs are rising, businesses usually need to charge more for their products and services, contributing to rising inflation. The report is considered moderately important and usually has more of an impact on the bond market than the stock markets. Current forecasts show an increase of 0.8%. A reading lower than expected would be favorable to bonds and tomorrow’s mortgage rates, but the Retail Sales data carries much more importance in the markets than this report does.

Overall, Wednesday or Friday are likely to be the most active day for rates due to the importance the Employment report and Consumer Price Index (CPI) carry in the markets. The calmest day should be Thursday unless something unexpected happens. We are expecting to see plenty of movement in the financial markets and mortgage rates this week. Therefore, it would be prudent to keep a close eye on them if still floating an interest rate and closing in the near future.

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... Lock 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.