Wednesday’s bond market has opened in negative territory following the release of this morning’s economic news and another increase in oil prices. The stock markets are showing modest gains with the Dow up 2 points and the Nasdaq up 2 points. The bond market is currently down 11/32, which will likely push this morning’s mortgage rates higher by approximately . 125 of a discount point over yesterday’s morning rates.

Yesterday’s afternoon release of the minutes from the last FOMC meeting led to a significant rally in stocks and helped keep bond prices higher during afternoon trading. This came form fairly strong indications in the minutes that the Fed was nearly done with raising key short-term interest rates. There was actually some concern of the Fed raising rates too far. This caused stocks to move higher, leading to the Dow closing up almost 200 points yesterday.

The positive news yesterday afternoon led to optimism in this morning’s key inflation report. However, the rally was short-lived as the CPI showed stronger than expected increases in prices paid at the consumer level of the economy. The Labor Department reported that the overall reading rose 0.4% and the core data increased 0.3%. Analysts were expecting to see 0.4% and 0.2% readings respectively.

Today’s CPI news helped erase all of yester day’s bond gains, pushing the benchmark yield on the 10-year Note above 5.00% again. Contributing to this morning’s selling is word that oil prices touched record levels, adding to inflation concerns. There is plenty of speculation that prices at the gas pump are going to continue to move higher this summer, which is also of concern to traders.

The Conference Board will release its Leading Economic Indicators (LEI) late tomorrow morning, which attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market may fall and mortgage rates could rise. If it shows weaker than expected readings, the bond market may rally and mortgage rates should move lower. This is considered to be a moderately important report, so we may see some movement in rates as a result of this report. It is expected to show no change.

We also will see weekly unemployment claims figures, but I don’t expect them to have an impac t on mortgage rates unless they vary greatly from forecasts.

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.

By Greg Robb

Last Update: 1:25 PM ET Apr 19, 2006

WASHINGTON (MarketWatch) — There is an important caveat to the recent Federal Reserve statement that it may be near the end of its tightening cycle, said Janet Yellen, the president of the San Francisco Fed bank on Wednesday. Economic data must confirm the Fed’s forecast of slowing growth while inflation expectations remain contained, Yellen said in an interview on the CNBC cable business channel. She said she was looking out for any data surprises that would indicate that the Fed’s forecast might not be accurate. Therefore, monetary policy was “data-surprise” dependent, Yellen said.

    A half a million dollars could go a long way in San Antonio, Texas, where the median price was $131,900 in the first quarter of this year, up 9% from the same period a year before. Area sellers continue to have the upper hand there, where the number of existing homes on the market dropped to 7,702 at the end of March, down 8.5% from the number of houses available in March 2005. However, home buyers are unlikely to face getting priced out of the market or find a lack of homes to choose from, thanks to plenty of new-home construction in the area.