•  Wednesday’s mortgage rates should be higher than Tuesday’s early pricing by approximately .125 of a discount point. The bond market is currently down 5/32 (4.47%).

 •  Stocks are mixed with the Dow down 162 points and the Nasdaq up 12 points.

 •  The second piece of this week’s trio of highly influential reports was posted early this morning. April’s Producer Price Index (PPI) showed that inflation at the wholesale level of the economy was hotter than the consumer level.

 •  The overall PPI reading jumped 1.4% last month when forecasts had it at 0.4%. The more important core data that excludes volatile food and energy costs wasn’t any better, coming in up 1.0% after analysts were expecting only a 0.3% rise.

 •  Year-over-year numbers also raised some eyebrows with the overall reading rising to a 6.0% annual pace and the core reading up 5.2%. Forecasts were for them to be at 4.8% and 4.3% respectively.

 •  Today’s inflation numbers are quite concerning for the economy, mortgage rates and the Fed. Even though there is an argument to make that some of it is due to high oil and gas prices that is expected to ease when the Iran war is over, the numbers were well above the upper end of the forecast range. They are also high enough to cause the Fed to start considering raising key short-term interest rates if there is not a quick reversal.

 •  It will be interesting to see what future inflation-related reports show, especially the Personal Income and Outlays report set for release the last week of the month that includes the Fed’ preferred inflation readings.

 •  Until then, except for the reopening of the Strait of Hormuz and/or ending of the Iran war that will drive oil prices lower, there isn’t much reason for bond yields to move significantly downward. This will make it hard for mortgage rates to improve noticeably over that span.

 •  Tomorrow morning brings us the release of two economic reports, both at 8:30 M ET. While they both are relevant, there is a significant difference in the level of importance between them.

 •  April’s Retail Sales report is the third major release of the week. It gives us consumer spending numbers that are watched closely because that category makes up over two-thirds of the U.S. economy. Analysts are expecting a 0.5% increase in sales from March to April and a 0.4% rise if more volatile and costly car transactions are excluded. Favorable news for bonds and mortgage rates will be data that shows consumer spending is softer than thought.

 •  Also early tomorrow morning will be the release of last week’s unemployment figures. They are expected to show 206,000 new claims for jobless benefits were made, up from the previous week’s 200,000 initial filings. Rising claims are a sign of the weakness in the employment sector. Therefore, the higher the number, the better the news for 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.