Tuesday's bond market opened in positive territory but has since slipped into negative ground after today's only relevant economic data showed a much higher than expected reading. The stock markets are rallying with the Dow up 196 points and the Nasdaq up 58 points. The bond market is currently down 50 basis points, which will likely push this morning's mortgage rates higher.

The Conference Board gave us the news that is pressuring bonds and boosting stocks. They said late this morning that their Consumer Confidence Index (CCI) spiked to 54.9 this month, greatly exceeding forecasts. Analysts were expecting to see a reading of approximately 42.0, meaning that consumers were much more optimistic about their own financial situations than many had thought. This is negative news for bonds because rising confidence usually translates into higher level of consumer spending, which fuels the economy.

The National Association of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a small increase in sales between March and April.

Overall, I think we have a busy week ahead of us. The big reports of the week were today's CCI and Thursday's Durable Goods Orders data. If Friday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates.

There are also a couple of Treasury auctions that are also worth noting. The 5-year sale Wednesday and the 7-year auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors.

                   Mel

The bond market has improved noticeably during afternoon trading after traders were able to digest the minutes from the last FOMC meeting. Those minutes revealed that the Fed has revised their economic outlook lower from previous estimates. They indicated that the U.S. unemployment rate is likely reach somewhere between 9.2% and 9.6% this year. They had previously predicted an 8.5% to 8.8% range, meaning the labor market is worse off than previously thought.

They also said that the Gross Domestic Product (GDP), which is the total of all goods and services produced on the U.S. and the best measurement of economic activity, will likely fall 1.3% - 2.0% this year. They had said previously that a drop between 0.5% and 1.3% was likely. This means that overall economic activity will likely be lower this year than their previous forecasts had called for.

Both of these revisions are good news for bonds. A weak labor market usually coincides with a weak economy. During a soft economic environment, bonds and mortgage related securities become more appealing to investors. This usually drives bond prices higher and mortgage rates lower.

The impact this news had on today's markets was favorable to mortgage borrowers. The stock markets fell with the Dow closing down almost 53 points and the Nasdaq down almost 7 points, while the bond market rallied to close up 16/32. The result should be an improvement in this afternoon's mortgage rates.

The Labor Department will post weekly unemployment figures early tomorrow morning. They are expected to say that 640,000 new claims for benefits were filed. This data is not considered to be important, so unless it varies greatly from analysts' forecasts, i t likely will not influence mortgage rates.

The last data of the week comes late tomorrow morning with the release of April's Leading Economic Indicators (LEI) at 10:00 AM ET. This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show a fairly large increase of 0.6% from March's reading, meaning that economic activity is likely to gain momentum during the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher tomorrow.

                   Mel

Monday's bond market has opened in negative territory following early stock gains. The stock markets are starting the week off strong with the Dow up 235 and the Nasdaq up 52 points. The bond market is currently down 25/32, which will likely push this morning's mortgage rates higher.

There is no relevant economic news scheduled for release today. The rest of the week brings us the release of only two pieces of economic news in addition to the minutes from the last FOMC meeting. Neither of the economic reports can be considered of high importance to the markets and mortgage rates, so we may see a fairly calm week for mortgage rates.

Tomorrow's release of April's Housing Starts is the first data of the week but is the less important of the two. This data measures housing sector strength and mortgage credit demand by tracking new permits and actual starts of new home construction. It is expected to show a small increase in new starts from March's readings. But, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

Overall, I think it will be a fairly calm week for mortgage rates, at least compared to last week. However, if the stock markets continue to rise, we may see bonds fall further and mortgage rates move higher the next few days.

Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday, Monday. These early closes sometimes lead to additional volatility in bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.

                   Mel

The stock markets have given back all of this morning's gains, falling well into negative territory and allowing bonds to improve during afternoon trading. The Dow is currently down 70 points while the Nasdaq is now down 8 points. The bond market is currently down 8/32, which should lead to afternoon improvements in mortgage rates.

The afternoon swing is due more as a result of concerns about stocks and the potential for further losses in the major indexes than it was about today's economic news. There is some strong speculation by some analysts that the stock markets are likely to be moving lower in the near future. This could make bonds more attractive to investors in the coming weeks and lead to improvements in mortgage rates. However, this is purely speculation at this point.

This morning's economic data basically gave us stronger than expected results that created a negative tone on the bond market during early trading. Those reports also led to this morning's stock gains. But, those gains were short-lived as the stocks are falling into the close of trading and will likely end the week with losses.

The Labor Department said early this morning that the Consumer Price Index (CPI) was unchanged last month, but the core data reading that excluded more volatile food and energy prices 0.3%. It was expected to rise only 0.1%, indicating that prices at the consumer level of the economy are rising quicker than thought. This is bad news for bonds because it raises inflation concerns and makes long-term securities less attractive to investors.

April's Industrial Production and the University of Michigan's Index of Consumer Sentiment also gave us stronger than expected results. The production report revealed a 0.5% decline in output compared to a 0.6% forecast. The sentiment index came in at 67.9, exceeding forecasts by more than a percentage point. Both of these reports were also unfavorable to bonds, but the CPI was the most important of the three and had the biggest influence on this morning's mortgage rates.

Next week is pretty light in terms of scheduled economic releases. There are no major economic reports scheduled for release except for the minutes from the last FOMC meeting.

Mel

Wednesday's bond market has opened in positive territory following a much weaker than expected Retail Sales report. The stock markets are showing sizable losses with the Dow down 159 points and the Nasdaq down 26 points. The bond market is currently up 31/32, which will likely improve this morning's mortgage rates.

The Commerce Department reported this morning that sales at retail establishments fell 0.4% last month. This was much lower than the 0.1% decline that was expected and indicates that consumer spending is softening. Since consumer spending makes up two-thirds of the U.S. economy, today's report hints that an economy recovery may not be as soon as some analysts had thought. That is good news for bonds and mortgage rates because slowing economic activity makes bonds and mortgage related securities more attractive to investors.

Tomorrow morning also brings us an important economic report with the release of April's Producer Price Index (PPI). This index helps us measure inflationary pressures at the producer level of the economy. If it reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond and stock markets rally. The overall index is expected to show an increase of 0.1%, while the core data that excludes food and energy prices is also expected to rise 0.1%. A smaller than expected increase in the core data would be ideal for mortgage shoppers.

Also tomorrow will be the release of last week's unemployment figures by the Labor Department. Last Thursday's posting showed a sizable drop in new claims for unemployment benefits. Tomorrow's release is expected to reveal 609,000 new claims were filed, which would be an increase of 8,000. However, this data is not nearly important as the PPI is and will likely not influence bond trading and mortgage rates unless it varies greatly from forecasts.

Friday brings us the release of three relevant reports, including the very important Consumer Price Index (CPI). The other two are moderately important to the markets, but the group of three combined can create a large amount of volatility in the markets if they reveal surprising results. But the CPI will be the primary report of the day.

                   Mel

Tuesday's bond market has opened down slightly with no important economic news scheduled for release today. The stock markets are mixed the Dow is up 50 points and the Nasdaq down 15 points. The bond market is currently down 3/32, but we will still likely see an improvement in this morning's mortgage rates due to strength late yesterday.

March's Goods and Services Trade Balance report was posted this morning, revealing a trade deficit of $27.6 billion. This figure was below forecasts, but since this data is not considered to be highly important, its impact on this morning's trading has been minimal.

The first important piece of data comes tomorrow morning when April's Retail Sales report will be released. This is an extremely important report for the financial markets as it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.1% decline in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower tomorrow. However, a larger increase could fuel bond selling and lead to higher mortgage rates.

Thursday brings us another important report with the release of April's Producer Price Index (PPI). This index helps us measure inflationary pressures at the producer level of the economy. If it reveals weaker than expected readings, indicating inflation is not a concern at the producer level, we should see the bond and stock markets rally. The overall index is expected to show an increase of 0.1%, while the core data that excludes food and energy prices is also expected to rise 0.1%. A smaller than expected increase in the core data would be ideal for mortgage shoppers.

          Mel

Thursday's bond market has opened in negative territory following the release of stronger than expected economic data and early stock gains. The stock markets are showing moderate strength during early trading but gave up ground on Bernake’s speech on stress testing. The Dow is down 95 points and the Nasdaq is down 38. The bond market is currently down 16/32, which will likely push this morning's mortgage rates higher.

The Labor Department gave us both of this morning's releases. The more important of the two was the 1st Quarter Productivity and Costs data that revealed a larger than expected 0.8% increase in worker output. The bad news came from the Unit Labor Costs reading that showed a 3.3% increase. That was higher than the 2.7% that was forecasted, meaning employer costs were higher than thought. Higher costs can translate to wage inflation concerns, therefore, this portion of the report is a negative for bonds.

The second bit of news was last week's unemployment figures. It showed that 601,000 new claims for benefits were filed last week. This is a three month low and was well below forecasts of 635,000, but fortunately this data is not considered to be highly influential on mortgage rates. However, it does raise additional concern about tomorrow's monthly report.

Yesterday's 10-year Note sale was met with a decent demand from investors. That led to improvements in bonds during afternoon trading yesterday and some lenders to revise mortgage pricing lower. The Treasury will sell 30-year Bonds today, posting the results at 1:30 PM ET. Another round of strong bidding could cause bonds to get back some of this morning's earlier losses. However, I suspect that most mortgage lenders will wait until tomorrow's big news rather than revising their rates this afternoon.

Tomorrow morning brings us the release of the almighty Employment report, giving us April's employment statistics. This is where we may see a huge rally or major sell-off in the bond market and large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be a larger than expected increase in the unemployment rate and more payrolls lost during the month than was expected.

It could turn out to be a wonderful day in the mortgage market tomorrow, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for an 8.9% unemployment rate and approximately 620,000 jobs lost during the month.

                   Mel

Tuesday's bond market has opened flat following a relatively calm opening for stocks and a lack of any significant surprises in this morning's testimony by Fed Chairman Bernanke. The stock markets are showing somewhat minor losses at the moment with the Dow down 16 points and the Nasdaq down 9 points. The bond market is currently nearly unchanged from yesterday's close, but we should still see an improvement in this morning's mortgage rates.

There was no important economic news scheduled for release today. But Chairman Bernanke is giving his speech before a Joint Economic Committee. His headline comment was that the economy will likely begin to expand later this year, effectively ending the recession. However, he also stated that activity and a broader expansion will be slow and that unemployment may rise further. Overall, it can be considered a cautiously optimistic outlook, which doesn't differ greatly from many analysts' predictions.

There is no relevant economic news scheduled for release tomorrow. The Treasury will sell 10-year Notes tomorrow and post results of the sales at 1:30 PM ET. If it was met with a strong demand, we should see bond prices rise during afternoon trading. If the reaction is strong in the market, it could lead to afternoon improvements to mortgage rates. The flip side of that though, is a weak interest from buyers that could lead to bond selling and higher mortgage rates late tomorrow.

The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning and April's Employment figures Friday morning. Thursday's report is fairly important, but Friday's data is one of the most important reports we see each month.

                   Mel