•  Thursday’s mortgage rates should be approximately .125 of a discount point lower than Wednesday’s early pricing. The actual change you see this morning depends if you got an intraday revision yesterday and the size of it. The bond market is currently down 5/32 (4.61%) to give back some of yesterday’s strong rally.

 •  Headlines from Iran that contradict intraday news yesterday of a peace deal being near is the primary reason for this morning’s bond weakness.

 •  Stocks are fairly calm at the moment with the Dow down 4 points and the Nasdaq down 87 points.

 •  Yesterday’s 20-year Treasury Bond auction didn’t go as well as it could have, but could have also been worse than it was. The 1:00 PM ET results announcement indicated investor demand was a little softer than it was for other recent sales. Fortunately, the Iran headlines had preceded the release of the auction details and fueled a midday bond rally. This allowed traders to ignore the auction results because the geopolitical headlines carried much more significance.

 •  The second Wednesday afternoon event was the release of the minutes from the April 28-29th FOMC meeting. They didn’t reveal any big surprises, albeit they did make clear that a Fed increase to key short-term interest rates is a real possibility if inflation does not subside soon.

 •  They showed a consensus that the immediate threat to the economy appears to be the Iran conflict and high oil prices that are fueling inflation.

 •  There were four dissenting votes to the policy decision they made at the meeting, but three of them dissented because they felt the policy statement should be less leaning to a possible rate cut and more to a neutral stance. Their nay votes were for the message being sent to the markets and not in objection to leaving short-term rates unchanged.

 •  This morning’s data isn’t having much of an influence on this morning’s mortgage pricing. The weekly unemployment update showed 209,000 new claims for unemployment benefits were filed last week, down from the prior week’s revised 212,000 claims. Last week’s number was a minor variance from expectations and this is just a weekly snapshot, so we have not seen much of a reaction to the data.

 •  April's Housing Starts report was also posted early this morning, revealing a 2.8% decline in new home groundbreakings. That figure includes starts of new multi-family housing such as apartments and condos.

 •  New starts of single-family homes that are much more sensitive to mortgage rates dropped 9% as high living costs and other related factors of the Iran war kept buyers on the sidelines. As a sign of weakness in the housing sector, we can label this report good news for rates. That said, this report carries a lower level of influence than most of the other monthly economic reports we see, preventing it from impacting this morning’s rates.  

 •  Tomorrow brings us the release of two more moderately important economic reports, both coming at 10:00 AM ET. One is the University of Michigan’s revised May Index of Consumer Sentiment. Rising confidence and the higher levels of spending that usually follow are considered negative news for bonds and mortgage rates. Tomorrow’s update is expected to show no change from this month's preliminary reading of 48.2. A higher reading would be considered bad news for bonds and mortgage pricing.

 •  April's Leading Economic Indicators (LEI) will finish this week’s economic calendar. This Conference Board report attempts to predict economic activity over the next three to six months. Analysts are expecting a 0.3% decline from March's reading, pointing to slower economic activity during the summer months. A larger decline would be considered good news for bonds and mortgage rates.

 •  Also worth noting about tomorrow is the early close for the bond market ahead of Monday's Memorial Day holiday. The bond market will close at 2:00 PM ET tomorrow while stocks trade for a full day. All markets will be closed Monday for the holiday.

 •  We sometimes see a bit of volatility in bonds in these situations as traders look to protect themselves over the three-plus day weekend, especially during volatile geopolitical events. This means we may see a little pressure during early afternoon trading tomorrow, assuming there are no big headlines prior to the early close.

 • 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.