By James Brooks

The bond market is up 7/32 (2.96%), which should improve Raleigh Area mortgage rates by approximately .125 of a discount point.

Yesterday’s 10-year Treasury Note auction went pretty well in terms of investor interest in the securities. We can’t call it a strong auction, but a little above average is fair. The bond market had little reaction to the results once they were posted, so there was not a change to mortgage rates either. Those results allow us to be somewhat optimistic about today’s 30-year Bond sale. If it goes very well, we could see improvements in bonds and mortgage pricing later today. They will be posted at 1:00 PM ET, therefore, any reaction will come during early afternoon trading.

April's Consumer Price Index (CPI) gave us some favorable news early this morning. The overall CPI reading rose 0.2% while the more important core data that excludes more volatile food and energy prices showed a 0.1% rise. Both readings fell short of forecasts by 0.1%, meaning inflationary pressures at the consumer level of the economy were not as strong as thought. That is very good news for bonds and mortgage rates and has fueled this morning’s bond gains.

Last week’s unemployment figures were also released at 8:30 AM ET, revealing 211,000 new claims for unemployment benefits were filed last week. This was unchanged from the previous week, but short of the 220,000 that expected. Because rising claims is a sign of weakness in the employment sector, we should consider this news to be slightly negative for mortgage rates. Fortunately, this is just a weekly snapshot and has not had an impact on today’s trading.

May's preliminary reading to the University of Michigan's Index of Consumer Sentiment will close out the week's calendar at 10:00 AM ET tomorrow. This index measures consumer willingness to spend, which relates to consumer spending. If consumers are more confident in their own financial situations, they are more apt to make large purchases in the near future. This report usually has a moderate impact on the financial markets though, because it is not exactly factual data. It is expected to show a reading of 98.0, which would be a decline from April's final reading of 98.8, indicating consumers are less confident than last month. If it shows a large decline in consumer confidence, bond prices could rise and mortgage rates would move slightly lower because waning confidence means consumers are less apt to make a large purchase in the near future.

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.