•  Tuesday’s mortgage rates should be approximately .250 - .375 of a discount point higher than Monday’s early pricing. The bond market is currently down 12/32 (4.45%).

 •  Stocks are also posting early losses with the Dow down 243 points and the Nasdaq down 214 points.

 •  This morning’s release of April’s Consumer Price Index (CPI) revealed inflation at the consumer level of the economy is still rising, but not just due to elevated gas prices. Since bonds lose some appeal to investors when inflation is rising, we are seeing a negative reaction to this data.

 •  The overall CPI matched forecasts with a 0.6% increase last month while the more important core data that excludes good and energy costs rose 0.4%. There were no upward surprises in these numbers, but they also did not come in lower than expected either.

 •  A secondary set of readings in the report that track prices year -over-year did give us some unfavorable results. The overall CPI jumped from March’s 3.3% to 3.8% last month. The core reading went from 2.6% in March to 2.8% in April to exceed forecasts by 0.1%.

 •  Today’s report shows that inflation is not limited to fuel and oil-related costs. Higher prices for other products and services are also pushing inflation further away from the Fed’s target of a 2.0% annual pace. This is troublesome for bonds and the direction of mortgage rates, especially since it could mean the Fed will need to raise key short-term interest rates before they start lowering them again.  

 •  Tomorrow brings us another inflation report with the release of April’s Producer Price Index (PPI) at 8:30 AM ET. This version tracks inflationary pressures at the wholesale level of the economy instead of the consumer level. Forecasts are calling for a 0.4% increase in the overall reading and a 0.3% rise in the core data. Good news for mortgage rates would be smaller monthly increases and a decline in the annual readings.

 •  We also have the first of this week’s two relevant Treasury auctions taking place tomorrow. The 10-year Treasury Note auction tomorrow and the 30-year Bond auction Thursday will help us determine investor appetite for long-term debt. Since mortgage rates are based on long-term securities, good news for rates would be a strong demand from investors during these sales. Results will be posted at 1:00 PM ET tomorrow, making this an early afternoon event for mortgage rates.

 • 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.