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Lake Tahoe Mortgage Rate Trends- January 26, 2015

Monday’s bond market has opened in negative territory as investors prepare for this week’s activities. The stock markets are starting the week with minor losses of 19 points in the Dow and 4 points in the Nasdaq. The bond market is currently down 15/32 (1.84%), but due to strength late Friday, I don’t believe we will see too much of a change in this morning’s mortgage rates.

There is nothing of importance being posted today. The rest of the week is quite busy though with six economic reports along with other events that are relevant to bond trading and mortgage rates. In addition to those six reports, there is also a two-day FOMC meeting and a couple of Treasury auctions that have the potential to affect bond trading enough to slightly move rates. The week’s calendar kicks off tomorrow with three economic reports.

The first is December’s Durable Goods Orders at 8:30 AM ET that helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items and include things such appliances, electronics and airplanes. The data is known to be quite volatile from month-to-month, but is currently expected to show an increase in orders of approximately 0.6%. A decline in orders would be considered good news for bonds and mortgage rates. Even though this an important report, a slight variance likely will have little impact on tomorrow’s mortgage pricing because of the large swings that are common in the data. Bond traders would prefer to see a large decline that would indicate weakness in the manufacturing sector.

January’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET tomorrow. This report is considered to be of moderate to high importance to the bond market and therefore can move mortgage rates if it shows any surprises. It is an indicator of consumer sentiment, which is important because waning confidence in their own financial situations usually means that consumers are less willing to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, market participants are very attentive to related data. Analysts are expecting to see a rise from December’s reading, indicating consumer confidence was stronger than last month. A reading much smaller than the expected 95.5 would be ideal for the bond market and mortgage rates. A higher reading than forecasts would hint that consumers are more likely to spend in the immediate future, fueling economic growth and possibly pushing mortgage pricing higher tomorrow.

December’s New Home Sales is the final release of the day, also at 10:00 AM ET tomorrow. It is considered to be the sister release to last week’s Existing Home Sales, giving us a small snapshot of housing sector strength. It tracks a much smaller portion of home sales than last week’s report did and is forecasted to show a decline in sales of newly constructed homes. However, this data is not important enough to heavily influence mortgage pricing unless it varies greatly from forecasts.

Overall, it is difficult to label any particular day this week as the most important for mortgage rates with so much going on. Wednesday has no economic data being posted, but it does have the FOMC meeting adjournment that is always big news. Friday’s GDP report is highly important but tomorrow has multiple reports set for release that can influence mortgage rates. And stocks can affect bond trading and mortgage pricing any day, as we have seen with all the recent volatility. With all of this scheduled, there is a decent chance of seeing a very active week in mortgage rates this week. Therefore, please maintain constant contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- January 25, 2015

This week is quite busy with six economic reports along with other events that are relevant to bond trading and mortgage rates. In addition to those six reports, there is also a two-day FOMC meeting and a couple of Treasury auctions that have the potential to affect bond trading enough to slightly move rates. There is nothing of importance set for release tomorrow, but we still should see some movements in the markets due to weekend geopolitical and weather-related news.

The week’s calendar kicks off Tuesday with three economic reports. The first is December’s Durable Goods Orders at 8:30 AM ET Tuesday that helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items and include things such appliances, electronics and airplanes. The data is known to be quite volatile from month-to-month, but is currently expected to show an increase in orders of approximately 0.6%. A decline in orders would be considered good news for bonds and mortgage rates. Even though this an important report, a slight variance likely will have little impact on Tuesday’s mortgage pricing because of the large swings that are common in the data. Bond traders would prefer to see a large decline that would indicate weakness in the manufacturing sector.

January’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET Tuesday. This report is considered to be of moderate to high importance to the bond market and therefore can move mortgage rates if it shows any surprises. It is an indicator of consumer sentiment, which is important because waning confidence in their own financial situations usually means that consumers are less willing to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, market participants are very attentive to related data. Analysts are expecting to see a rise from December’s reading, indicating consumer confidence was stronger than last month. A reading much smaller than the expected 95.5 would be ideal for the bond market and mortgage rates. A higher reading than forecasts would hint that consumers are more likely to spend in the immediate future, fueling economic growth and possibly pushing mortgage pricing higher Tuesday.

December’s New Home Sales will also be posted late Tuesday morning. It is considered to be the sister release to last week’s Existing Home Sales, giving us a small snapshot of housing sector strength. It tracks a much smaller portion of home sales than last week’s report did and is forecasted to show a decline in sales of newly constructed homes. However, this data is not important enough to heavily influence mortgage pricing unless it varies greatly from forecasts.

This year’s first FOMC meeting that begins Tuesday will adjourn Wednesday at 2:00 PM ET. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking for any indication of the Fed’s change in sentiment about the economy and when a potential change to short-term rates will be made. There is a decent possibility of seeing some afternoon volatility in the markets Wednesday due to the 2:00 PM ET post-meeting statement. However, I would be surprised if the statement revealed any significant surprises or changes to monetary policy.

Friday has the remaining three reports, starting with what is arguably the single most important economic report that we see regularly. This would be the initial quarterly Gross Domestic Product (GDP) reading. Friday’s release is the first of three we will get for the 4th quarter. This data is so important because it is considered to be the best measurement of economic activity. The GDP itself is the total sum of all goods and services produced in the United States. Its results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. This initial reading will be followed by two revisions, each released approximately one month apart. Last quarter’s first reading, which usually carries the most significance, is expected to show the economy grew at an annual rate of 3.2%. A noticeably weaker reading would be great news for the bond market, questioning the pace of economic growth. That would likely fuel stock selling and a rally in bonds that should push mortgage rates lower Friday morning. However, a larger than expected increase, indicating the economy was stronger than thought, will probably fuel bond selling and lead to higher mortgage rates.

The second release of the day will be the 4th Quarter Employment Cost Index (ECI), also at 8:30 AM ET. This index measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. If wages are rising, consumers have more money to spend and businesses usually need to charge more for their products and services. The report is considered moderately important and usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.5%. A lower than expected reading would be favorable to bonds and mortgage rates Friday, but unless we see a large variance from forecasts I am not expecting this report to have much of an influence on rates.

The final economic report of the week is the revised reading to the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET Friday. This index is another measurement of consumer confidence that is thought to indicate consumer willingness to spend. I don’t see this data having much of an impact on the markets or mortgage rates unless we see a large revision from the preliminary reading of 98.2.

Also worth noting, there are two relatively important Treasury auctions for the markets to digest. The Fed will auction 5-year and 7-year Treasury Notes Wednesday and Thursday respectively. If the sales are met with a strong demand from investors, the broader bond market may improve during afternoon hours. If they draw a lackluster interest, they could lead to bond selling and higher mortgage rates mid-afternoon Wednesday and/or Thursday.

Overall, it is difficult to label any particular day this week as the most important for mortgage rates with so much going on. Wednesday has no economic data being posted, but it does have the FOMC meeting adjournment that is always big news. Friday’s GDP report is highly important but Tuesday has multiple reports set for release that can influence mortgage rates. And stocks can affect bond trading and mortgage pricing any day, as we have seen with all the recent volatility. With all of this scheduled, there is a decent chance of seeing a very active week in mortgage rates this week. Therefore, please maintain constant contact with your mortgage professional if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- January 23, 2015

Friday’s bond market has opened in positive territory with no negative surprises in this morning’s economic data and early stock weakness helping to make bonds more attractive. The major stock indexes are looking to close the week out on a negative note. The Dow is currently down 79 points while the Nasdaq has lost 6 points. The bond market is currently up 19/32 (1.80%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.

Neither of this morning’s economic reports gave us a significant surprise. The National Association of Realtors announced late this morning that home resales rose 2.4% last month, indicating modest growth in the housing sector. While the sign of growth is technically bad news for bonds, it was a smaller increase in sales than many had thought. That makes the data neutral to slightly favorable for bonds and mortgage rates.

December’s Leading Economic Indicators (LEI) was the second report of the morning, revealing a 0.5% rise. This means that the indicators are predicting an increase in economic activity over the next several months. Since it pegged forecasts, it also has had little impact on this morning’s mortgage pricing.

Next week brings us a handful of economic reports that have the potential to affect mortgage rates, including one that is highly influential to the financial and mortgage markets. In addition to the reports, we also have a couple of semi-relevant Treasury auctions and a highly relevant FOMC meeting. There is nothing of importance scheduled for Monday, so expect weekend news and stock movement to be the biggest factors in that day’s mortgage rate changes. Look for details on next week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- January 22, 2015

Thursday’s bond market initially opened in negative territory but has since recovered those early losses. The stock markets are showing sizable gains with the Dow up 118 points and the Nasdaq up 31 points. The bond market is currently up 5/32 (1.85%), which should keep this morning’s mortgage rates at yesterday’s early levels. Some lenders did revise rates higher during afternoon trading, but this morning’s small gains should offset that adjustment.

Today’s sole piece of economic data was last week’s unemployment numbers at 8:30 AM ET. They revealed that 307,000 new claims for unemployment benefits were filed last week, down from the previous week’s revised total of 317,000. The declining number of claims indicates the employment sector was a bit stronger last week than the previous week. However, because analysts were expecting to see that 302,000 initial claims were made, the 307,000 hints of a weaker than thought sector and makes the data neutral for mortgage rates.

The European Central Bank (ECB) actually took center stage this morning with their announcement of a 1.2 trillion euro bond buying program (60 billion per month) in an attempt to boost economic growth and prevent price deflation there. This is similar to our QE programs of the past, the latest that ended late last year. There was some volatility in the global markets following the announcement, including here in the U.S. The net effect on today’s mortgage rates is favorable though because bonds appeared to be well in negative ground before the official announcement was made. Prior to it, it looked as if this morning was going to be a negative day for bonds with an increase in mortgage rates.

Tomorrow morning has two pieces of economic data that may possibly affect mortgage rates. Both reports are scheduled for release at 10:00 AM ET. The first is December’s Existing Home Sales from the National Association of Realtors. This data will give us a measurement of housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a rise in sales from November’s level, meaning the housing sector strengthened last month. Ideally, bond traders would like to see a decline in sales that would point toward housing sector weakness because a weakening housing sector makes broader economic growth more difficult. However, as long we don’t see a significant surprise in its results, it shouldn’t have a noticeable impact on Friday’s mortgage rates.

December’s Leading Economic Indicators (LEI) is the final report of the week. The Conference Board, who is a New York-based business research group compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Tomorrow’s release is expected to show a 0.5% increase, meaning the indicators are predicting an increase in economic activity this spring. As long as we don’t see a much stronger than predicted increase, I don’t think this data will have much of an influence on mortgage pricing.

Lake Tahoe Mortgage Rate Trends- January 21, 2015

Wednesday’s bond market has opened flat with today’s only relevant economic data showing stronger than expected results. The stock markets are showing minor gains with the Dow up 4 points and the Nasdaq up 29 points. The bond market is currently nearly unchanged from yesterday’s close (1.79%), but we will likely still see an increase in this morning’s mortgage rates of approximately .125 of a discount if comparing to yesterday early pricing due to weakness in afternoon trading.

The Commerce Department said that new housing construction starts rose 4.4% last month, exceeding forecasts. That makes the data technically negative for the bond and mortgage markets, but this report is not considered to be highly important and the variance from expectations was not significant. Therefore, the net impact this news had on this morning’s rates was minimal.

Also worth mentioning today are rumors that the European Central Bank (ECB) already has decided what action they will take to boost economic activity in the Euro region. Supposedly they are going to start buying 50 billion euros worth of bonds per month starting in March. The rumor has the program expected to continue until the end of 2016. This move was widely expected in the global markets, but there has been some debate about the size of the campaign and the monthly purchase amount. Keep in mind that this is just a rumor at this time and will not be confirmed until early tomorrow morning our time when the official announcement is released.

The only economic data being posted tomorrow that has the potential to affect mortgage rates is last week’s unemployment numbers at 8:30 AM ET. They are expected to show that 302,000 new claims for unemployment benefits were filed last week, down from the previous week’s 316,000 initial claims. Rising initial claims indicates employment sector weakness, so the higher the number the better the news it is for bonds and mortgage rates. Although, because this is only a weekly snapshot, it usually does not cause much movement in mortgage pricing unless it shows a significant variance from forecasts.

Lake Tahoe Mortgage Rate Trends- January 20, 2015

Tuesday’s bond market has opened in positive territory as investors prepare for this week’s global events. Stocks are starting the holiday-shortened week with relatively minor losses of 54 points in the Dow and 5 points in the Nasdaq. The bond market is currently up 15/32 (1.78%), but due to heavy selling Friday before the long weekend, we should see little change in this morning’s mortgage rates or even a slight increase if comparing to Friday’s morning pricing.

There is nothing of importance being released today that is expected to affect rates. The rest of the week brings us the release of only three pieces of monthly economic data for the markets to digest, but none of them are considered to be highly important for mortgage rates. We also have some key economic data coming from overseas and an FOMC-equivalent event in Europe later this week that is expected to yield a new bond-buying program in the Euro zone in an attempt to boost economic growth there. In addition to all of that, we also have earnings releases from several big-name companies that traditionally affect broader stock trading and therefore, could have an impact on the bond market.

The first data of the week is December’s Housing Starts at 8:30 AM tomorrow. It helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don’t see it causing much movement in mortgage rates tomorrow but does carry the potential to affect trading and rates if it shows a significant surprise. Analysts are expecting to see an increase in new home starts between November and December.

Overall, despite a light week in terms of the number of economic reports scheduled, we still may see a very active week in the markets and mortgage pricing. We will be focusing on items overseas this week just as much as our economic reports. Thursday or Friday are the best candidates for most important day of the week. I suspect we will have more than one day of volatility and intraday revisions to mortgage rates though. Accordingly, please maintain contact with your mortgage professional and proceed cautiously if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- January 18, 2015

This week brings us the release of only three pieces of monthly economic data for the markets to digest, but none of them are considered to be highly important for mortgage rates. It is a shortened trading week with the stock and bond markets closed tomorrow in observance of the Martin Luther King Jr. holiday. The financial and mortgage markets will reopen Tuesday morning for regular trading hours. Accordingly, there will be no update to this report tomorrow morning.

The first data of the week is December’s Housing Starts at 8:30 AM Wednesday. It helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don’t see it causing much movement in mortgage rates Wednesday but does carry the potential to affect trading and rates if it shows a significant surprise. Analysts are expecting to see an increase in new home starts between November and December.

The remaining two monthly reports are scheduled for release at 10:00 AM ET Friday. The first is December’s Existing Home Sales from the National Association of Realtors. This data will give us a measurement of housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a rise in sales from November’s level, meaning the housing sector strengthened last month. Ideally, bond traders would like to see a decline in sales that would point toward housing sector weakness because a weakening housing sector makes broader economic growth more difficult. However, as long we don’t see a significant surprise in its results, it shouldn’t have a noticeable impact on Friday’s mortgage rates.

December’s Leading Economic Indicators (LEI) is the final report of the week. It will be posted at 10:00 AM ET Friday also. The Conference Board, who is a New York-based business research group compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Friday’s release is expected to show a 0.4% increase, meaning the indicators are predicting an increase in economic activity this spring. As long as we don’t see a much stronger than predicted increase, I don’t think this data will have much of an influence on mortgage pricing either.

Overall, despite a light week in terms of the number of economic reports scheduled, we still may see a very active week in the markets and mortgage pricing. In addition to our data there are also some key pieces of foreign economic data being released that can be highly influential. There is also a European Central Bank event Thursday that is equivalent to our FOMC meetings that is expected to bring an announcement the ECB will kick off a bond buying program to help stimulate economic growth in the Euro region. In other words, we will be focusing on items overseas this week just as much as our economic reports. I suspect we will have more than one day of volatility and intraday revisions to mortgage rates. Accordingly, please maintain contact with your mortgage professional and proceed cautiously if still floating an interest rate and closing in the near future.

Lake Tahoe Mortgage Rate Trends- January 16, 2014

Friday’s bond market has opened in negative territory as profit-taking and early stock gains pressure bonds. The major stock indexes are showing moderate gains with the Dow up 79 points and the Nasdaq up 27 points. The bond market is currently down 25/32 (1.81%), but due to strength late yesterday, today’s increase in rates should be limited to approximately .125 of a discount point if comparing to yesterday’s morning pricing.

The first of this morning’s three economic reports was December’s Consumer Price Index (CPI) at 8:30 AM. It revealed a 0.4% decline in the overall reading and no change in the core data that excludes food and energy costs. The overall reading pegged forecasts while the core reading was slightly weaker than the 0.1% increase that was expected. That makes the data slightly favorable for bonds and mortgage rates because it shows inflation is still not a threat at the consumer level of the economy.

Next up was December’s Industrial Production report at 9:15 AM ET. This release revealed a 0.1% decline in production at U.S. factories, mines and utilities. That matched forecasts and hints that the manufacturing sector was fairly flat last month. Therefore, we should consider the results neutral for the bond and mortgage markets.

January’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment finished out this week’s calendar just before 10:00 AM ET. It came in at 98.2, exceeding forecasts of 94.1 by a fairly wide margin. That means surveyed consumers were much more optimistic about their own financial and employment situations than many had thought. Because rising confidence usually translates into higher levels of consumer spending, we should consider this report to be bad news for mortgage rates.

The financial and mortgage markets will be closed Monday in observance of the Martin Luther King Jr. holiday. There is no early close today ahead of it. Next week brings us a couple of relevant reports, but none are considered to be key or highly important to mortgage rates. We will address next week’s activities in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- January 15, 2015

Thursday’s bond market has opened in positive territory again despite mixed economic news. The stock markets are showing relatively minor losses with the Dow down 43 points and the Nasdaq down 33 points. The bond market is currently up 12/32 (1.81%), but due to weakness in trading late yesterday we will likely see little change in this morning’s rates if comparing to Wednesday’s morning pricing.

Yesterday afternoon’s events didn’t appear to directly cause bond selling but we did see some weakness as the afternoon progressed. The 30-year Bond auction was not well received with several benchmarks we use to gauge investor demand pointing towards a lackluster interest. The Fed Beige Book gave us what should be considered slightly favorable news because it did not show major gains in economic growth. Most regions reported economic activity at the same levels of the last update and some indicated low oil prices could have a negative impact on some sectors. The net effect this news had on mortgage rates was fairly minimal. The weakness in bonds was more a result of profit-taking and stabilization in the market than the afternoon news pieces.

We had two economic reports posted early this morning. One gave us good news while the other was technically negative. The bad news wasn’t actually bad for bonds. December’s Producer Price Index (PPI) showed a 0.3% decline in the overall reading and a 0.3% increase in the core data that excludes more volatile food and energy prices. The overall reading was expected to fall 0.4% and the core reading was supposed to rise only 0.1%. Those readings indicate that inflationary pressures at the producer level of the economy were a little stronger than many had thought. Since bonds are sensitive to rising inflation, we should consider the data negative for rates even though it has not had too much of an impact on this morning’s pricing.

The second release of the morning was last week’s unemployment numbers. It showed that 316,000 new claims for unemployment benefits were filed last week, up from the previous week’s revised total of 297,000. That is actually good news for bonds and mortgage rates because rising claims is a sign of a softening employment sector. Unfortunately, this is only a weekly snapshot of the sector, so its influence on this morning’s mortgage rates has been minimal.

Tomorrow closes the week with three economic reports that have the potential to affect mortgage rates. The first is December’s Consumer Price Index (CPI) at 8:30 AM. This is one of the more important monthly reports for the bond market each month since it measures inflationary pressures at the consumer level of the economy. As with today’s PPI, there are two readings in the release. The overall index is expected to increase 0.4% while the core data rose 0.1%. Weaker than expected readings would be favorable news and should lead to bond strength and lower mortgage rates Friday morning.

December’s Industrial Production report has a release time of 9:15 AM ET Friday. This data measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength or weakness. Current forecasts are calling for a decline in production of 0.1% from November’s level. A weaker reading would be considered good news for bonds and could help lower mortgage rates as it would point towards a manufacturing sector that was softer than many had thought.

The final report of the week is January’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to slightly change mortgage rates. If consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future, fueling economic growth. Good news would be a reading weaker than December’s 93.6 that means consumers felt less confident this month and likely will avoid making a large purchase in the immediate future. Analysts are expecting to see 94.1.

Lake Tahoe Mortgage Rate Trends- January 14, 2015

Wednesday’s bond market has opened up sharply after this morning’s key economic data showed surprisingly weak results. The stock markets are reacting negatively to the data, pushing the Dow lower by 158 points and the Nasdaq down by 17 points. The bond market is currently up 24/32 (1.82%), which with yesterday’s afternoon strength should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point if comparing to Tuesday’s morning pricing.

The Commerce Department gave us this morning’s big news with the release of December’s Retail Sales report at 8:30 AM ET. They announced that retail-level sales fell a whopping 0.9% last month compared to analysts’ expectations of a 0.1% increase. Even a secondary reading that excludes more volatile auto transactions came in much weaker than forecasts (-1.0% vs +0.1%). This means consumers spent much less last month than many had thought and down considerably from November’s levels. That is clearly favorable news for the bond and mortgage markets because it points towards a softening economy here in the U.S.

We have two events that have the potential to affect afternoon bond trading and mortgage rates later today. The first is the results of today’s 30-year Bond auction at 1:00 PM ET. Yesterday’s 10-year Note sale went fairly poorly with several indicators we use to gauge investor demand showing a weak level of interest in the securities. That doesn’t give us much to be optimistic about in today’s sale, although the bond market still seemed to improve after results were posted yesterday. This may mean we could be buffered if today’s sale draws similar results, especially with this morning’s major economic data working heavily in our favor.

The Federal Reserve’s Beige Book will also be posted during afternoon hours. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises, particularly regarding inflation, unemployment or future hiring. Any reaction to the report though will come after its 2:00 PM ET posting.

Tomorrow has two pieces of economic data set for release at 8:30 AM ET, but one is much more important than the other. December’s Producer Price Index (PPI) is the first and more likely to affect mortgage rates than the second. The PPI is important to the markets and mortgage rates because it measures inflationary pressures at the producer level of the economy. Analysts are expecting to see a 0.4% decline in the overall reading and a 0.1% increase in the more important core reading that excludes volatile food and energy prices. A larger than expected increase in the core reading could mean higher mortgage rates tomorrow since inflation is bad news for the bond market. It erodes the value of a bond’s future fixed interest payments, making them less attractive to investors. Accordingly, they are sold at a discount to offset the drop in value, which drives their yields higher. And since mortgage rates follow bond yields, rising inflation usually translates into higher interest rates for borrowers.

The second release is the weekly unemployment update that is expected to show 290,000 new claims for unemployment benefits were filed last week. That would be a small decline from the previous week’s 294,000 initial claims, indicating the employment sector strengthened slightly last week. The higher the number of new claims, the better the news it is for bonds and mortgage rates because rising claims indicates a softening employment sector.