• This week brings us the release of six monthly and quarterly economic releases with three of them being labeled highly important. In addition to the data, we will also get a periodic Fed report and geopolitical news from the Middle East.

 • Before we tackle this week’s calendar, it is important to address this weekend’s Iran headlines. We could see bonds open tomorrow with gains as stocks are likely to tank. This would be a textbook example of flight to safety as investors move funds from stocks into bonds as a safe-haven from the sell-off.

 • While this gives us good news for rates tomorrow and possibly the next day or two, things could change significantly if oil prices continue to move higher after the initial reaction tomorrow. We already got surprisingly strong wholesale inflation news last Friday in January’s Producer Price Index (PPI). Much higher oil prices for a sustained period will only fuel stronger inflation, making it more likely the Fed will need to raise key short-term interest rates before they lower them.

 • Another concern with geopolitical events such as this is the fact that if the issue is resolved quickly, we often see stocks rebound and bonds reverse their initial gains. In other words, enjoy the move lower in rates right now, but keep an eye on related news, particularly regarding the Strait of Hormuz, because higher oil prices will eventually be a negative for rates.

 • The Institute for Supply Management (ISM) will kick off this week's activities when they post their manufacturing index for February at 10:00 AM ET tomorrow. This highly important index tracks manufacturer sentiment by using surveyed executives' opinions of business conditions. Predictions show a reading of 52.3, which would be lower than January's 52.6. The lower the reading, the better the news for the bond market and mortgage rates because weaker sentiment indicates a slowing manufacturing sector.

 • Tuesday doesn’t have any relevant economic data scheduled, but Wednesday has three events that we will be watching.

 • First Wednesday will be February's ADP Employment report at 8:15 AM ET. It is an employment-related report that tracks changes in private-sector jobs. Analysts are expecting to see 45,000 new private jobs were added to the economy last month. A much smaller number would be favorable to mortgage rates.

 • The Institute for Supply Management (ISM) will release their non-manufacturing index (aka service index) at 10:00 AM ET Wednesday. This version tracks business executive opinions on conditions in the service sector rather than manufacturing. It is expected to show a reading of 54.0 for February, up slightly from January's 53.8. A reading above 50.0 means more surveyed executives felt business improved during the month than those who said it worsened. Good news for rates would be a much lower reading than what forecasts are showing.

 • The Fed Beige Book will close Wednesday's activities at 2:00 PM ET. This report details economic activity throughout the country by Federal Reserve region via their business contacts. It probably will not cause a major sell-off in the stock or bond markets but can fuel a strong enough move to cause a minor intraday revision to rates if it reveals noticeably weaker or stronger economic activity and/or inflation since the last update.

 • Employee Productivity and Costs data for the 4th quarter will be released early Thursday morning. If the productivity reading varies greatly from the 3rd quarter's 4.9% rise, we may see a slight move in mortgage pricing. Higher levels of worker productivity are good news for the bond market because it allows the economy to expand without fueling inflation.

 • Friday has two very important reports scheduled to be released. One is the monthly governmental Employment report for February at 8:30 AM ET. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a much smaller than expected payroll number and little or no rise in earnings. The current consensus is for the unemployment rate to have held at January’s 4.3% and approximately 60,000 new jobs added to the economy while monthly earnings rose 0.3%. Stronger than expected numbers will likely fuel selling in bonds that would cause a sizable upward revision to mortgage rates.

 • The other big report will be January's Retail Sales report, also early Friday morning. This data is very important to the financial markets because it measures consumer spending and that category makes up over two-thirds of the U.S. economy. Forecasts are calling for a 0.2% decline from December's sales. A larger decline would be good news for rates.

 • Also worth noting is the fact the benchmark 10-year Treasury Note yield broke below 4.00% last Friday for the first time since November and closed at 3.95%, despite the strong inflation data. In hindsight, it is apparent that traders were pricing in military action in Iran even though negotiations were reportedly progressing.

 • Friday’s momentum could carry into tomorrow morning’s trading, but concerns about a spike in oil prices fueling inflation may push the 10-year yield back above 4.00% fairly soon. Because mortgage rates tend to track bond yields, such a move would cause an increase in mortgage pricing.

 • Overall, Friday is the most important day of the week for rates with two highly influential economic reports set for release. Tomorrow may also be active as we see the initial reaction to the weekend headlines and results of the ISM index.

 • The calmest day could be Thursday unless something unexpected happens or Middle East news hits the wires.

 • It is safe to assume we will see a very volatile week in the markets with plenty of movement in mortgage rates. Therefore, please keep an eye on them if still floating an interest rate and closing in the near future.

 • 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... Float 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.