• Wednesday’s mortgage rates should be lower by approximately .375 of a discount point if compared to Tuesday’s early pricing. The bond market is currently up 22/32 (4.41%).

 • Stocks are also showing early gains to push the Dow higher by 205 points and the Nasdaq up 93 points.

 • This morning’s release of May's New Home Sales report revealed a 7.3% drop in sales of newly built homes last month. May’s decline is a sign of weakness in the housing sector that makes the data good news for bonds and mortgage rates. That said, the data is not the reason for this morning’s bond rally. It doesn’t carry enough importance in the markets to fuel bond gains the size of this morning’s rally.

 • We are seeing a few things come together for bonds this morning, including lower oil prices, President Trump’s announcement of a DOJ investigation into gas price gouging that may contribute to lower prices at the pump and just a lack of unfriendly bond headlines are allowing bond prices to move higher this morning, pushing yields and mortgage rates lower.

 • We also have the results from today’s 5-year Treasury Note auction to watch. The 1:00 PM ET announcement makes this an early afternoon event for rates. Favorable news would be the benchmarks in the results pointing to a strong demand from investors. This scenario gets repeated tomorrow when 7-year Notes are being sold.

 • Tomorrow brings us the majority of this week’s economic releases with the weekly unemployment update, two monthly reports that draw plenty of attention and a quarterly GDP revision all set to be posted at 8:30 AM ET.

 • The most important of the batch is May’s Personal Income and Outlays report at 8:30 AM ET that will give us an indication of consumer ability to spend and current spending activity. If consumers have more money to spend each month they will likely spend more, fueling economic growth. Analysts are expecting to see a 0.4% rise in income while spending rose 0.6% during the month. Smaller than expected increases for both readings would be good news the bond market and mortgage rates.

 • What makes the Personal Income and Outlays report so influential is not the income and spending readings though. This report also includes important inflation readings that the Fed heavily relies on during their FOMC meetings.

 • Forecasts have the overall Personal Consumption Expenditures (PCE) index up 0.4% for the month while the more important core data that excludes volatile food and energy costs is predicted to rise 0.3%. The year-over-year PCE readings are expected to rise from April’s pace, indicating inflation was stronger last month than it was the month before.

 • Stronger inflation makes long-term securities, such as mortgage bonds, less attractive to investors and may cause the Fed to raise key rates. Therefore, good news for mortgage rates would be noticeably weaker PCE readings tomorrow.

 • May's Durable Goods Orders report is next in terms of importance level. It will give us an indication of manufacturing sector strength by tracking orders at U.S. factories for products that are expected to last three or more years such as airplanes, appliances and electronics. Forecasts show a decline in orders in the neighborhood of 4.0%. A larger drop would be good news for mortgage pricing.

 • The second revision to the 1st Quarter Gross Domestic Product (GDP) reading is also coming tomorrow. However, this data is quite aged now and will likely have little impact on the bond market or mortgage pricing since market participants are looking more towards next month's release of the current quarter's initial GDP reading. Tomorrow's update is expected to match the initial revision that the economy grew at a 1.6% annual rate. Weaker economic activity makes bonds more appealing to investors.

 • And finally, the weekly unemployment update is predicted to show 224,000 new claims for jobless benefits were filed last week. This would be a decline from the previous week’s 226,000 initial filings. Since rising claims are a sign of weakness in the employment sector, an increase from the previous week would be considered favorable for mortgage pricing.

 • Visit our Daily Commentary page on our site for detailed explanations on current news that is relevant to mortgage rates.

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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.