• Tuesday’s mortgage rates should be higher by approximately .250 of a discount point due to afternoon bond selling Monday. If you saw an intraday increase yesterday, you may not see a change this morning. The bond market is currently up 2/32 (4.18%).

 • Stocks are showing early losses with the Dow down 340 points and the Nasdaq down 49 points.

 • Yesterday’s 10-year Treasury Note auction was mostly uneventful. The 1:00 PM ET results announcement indicated an average or slightly stronger demand from investors compared to other recent sales. We saw bonds improve modestly after the announcement, but within an hour they had reversed course and yields continued to move higher throughout late afternoon trading. This led to some lenders issuing an intraday increase in rates before closing.

 • This morning’s major economic news was the release of December’s Consumer Price Index (CPI) at 8:30 AM ET. The report showed inflation at the consumer level of the economy rose 0.3% last month, matching expectations. Core data, that excludes more volatile food and energy costs, rose 0.2% when forecasts had it up 0.3%.

 • Year-over-year CPI readings came in similarly with overall inflation at a 2.7% annual pace and the more important core reading holding at November’s 2.6% rate instead of rising to 2.7% as expected. The lower than predicted core readings allow us to label the report as good news for bonds and mortgage rates because weaker inflation makes bonds more attractive to investors and allows the Fed to be more aggressive in lowering key rates.

 • Today’s second economic release was significantly less influential than the earlier inflation data. New Home Sales figures for September and October were posted at 10:00 AM ET. They revealed sales of newly constructed homes rose 3.8% in September, adding on to August’s 20.8% jump. October’s sales slipped 0.1%, pretty much holding onto September’s gains. Because this report covers such a small percentage of all home sales and the data is fairly ancient in terms of economic relevancy, it has had no impact on this morning’s bond trading or mortgage pricing.

 • Since yesterday’s auction drew a respectable interest from investors, we are optimistic that today’s 30-year Bond auction will go fairly well also. A strong sale would mean investors still have an appetite for long-term debt, which is what mortgage rates are based on. However, if the 1:00 PM ET results release points to a lackluster or weak demand, we could see afternoon pressure in bonds that causes an intraday increase in mortgage pricing during afternoon trading.

 • Tomorrow has four more economic releases that we will be watching, including two that are considered highly important. One of those two is the sister release of today’s CPI. October and November’s combined Producer Price Index (PPI) will be posted at 8:30 AM ET tomorrow, telling us what inflationary pressures at the wholesale level of the economy looked like last month. The monthly PPI increases are expected to be similar to the CPI, but the annual readings differ. Good news for rates would be softer than expected price pressures.

 • The second highly important release of the day will be November’s Retail Sales data, also at 8:30 AM ET. It measures consumer spending, which is watched closely because this category makes up over two-thirds of the U.S. economy. Current forecasts show a 0.4% rise in overall sales, indicating economic strength. Analysts are expecting to see a 0.3% rise in sales if more volatile and costly auto transactions are excluded. Stronger than expected sales would be considered bad news for bonds and likely lead to an increase in mortgage pricing.

 • The National Association of Realtors will give us the most relevant housing sector report at 10:00 AM ET tomorrow. Their December Existing Home Sales report offers insight into the housing sector via home resale statistics. Market participants are expecting to see a small increase in sales last month due to lower mortgage rates.

 • Tomorrow’s final release is an afternoon event that will be posted at 2:00 PM ET. The Federal Reserve's Beige Book details economic conditions throughout the U.S. by Fed region through the eyes of their business contacts. Of particular interest is information regarding inflation and employment strength. If there is a reaction to the report, it will come during mid-afternoon trading.

 • 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.