By James Brooks

The bond market is down 8/32 (3.00%), which should push Raleigh Area mortgage rates higher by approximately .125 of a discount point.

April's Producer Price Index (PPI) kicked off this week's calendar at 8:30 AM ET. It showed a 0.1% rise in the overall reading and a 0.2% increase in the core data. The overall reading fell just short of the 0.2% forecast but the more important core reading that excludes more volatile food and energy costs pegged expectations. The light overall reading allows us to consider the data slightly favorable. However, because the core data showed no surprises, it has had no impact on this morning's mortgage rates.

The second event of the day will be the 10-year Treasury Note auction that will come into play this afternoon. Results of the sale will be posted at 1:00 PM ET. If it was met with a strong demand from investors, particularly international investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. On the other hand, lackluster bidding in the auction, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing during afternoon hours. This will repeat tomorrow for the 30-year Bond auction.

Tomorrow has two events scheduled, one being much more important than the other. April's Consumer Price Index (CPI) will be posted at 8:30 AM ET. This is the sister report to today's PPI, but measures inflationary pressures at the more important consumer level of the economy. These results will be watched closely and could lead to significant volatility in the bond market and mortgage pricing if they show any significant surprises. Current forecasts are calling for a 0.3% increase in the overall index and a 0.2% rise in the core data reading. This data can also affect the Fed's timeline for raising key short-term interest rates and will also help dictate mortgage rate direction.

Also early tomorrow morning will be last week's unemployment update. It is expected to show that 220,000 new claims for unemployment benefits were filed last week, up from the previous week's 211,000. Rising initial claims are a sign of employment sector weakness, so the larger the number of claims, the better the news it is for mortgage rates. Although, because this is only a weekly reading we usually need to see a significant variance from forecasts for it to impact mortgage rates.

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.