Monday’s bond market has opened down slightly as investors prepare for this week’s events. The stock markets opened with gains but have since fallen into negative ground. The Dow and Nasdaq are both currently down approximately 3 points. The bond market is down 4/32, but I am not expecting to see a change in this morning’s mortgage rates.

This week is pretty light in terms of economic releases scheduled for the bond market to digest. There are only three reports scheduled to be posted, with only one of them considered to be of high importance to the bond market. However, in addition to those three reports, we also have another FOMC meeting to deal with. This makes it quite likely we will see another week of volatility in the markets and possibly mortgage pricing.

This week’s FOMC meeting is scheduled for Wednesday, not Tuesday as previously noted. It is expected to bring another quarter point increase to key short-term interest rates. As usual, the biggest concern is what the post-meeting statement may say. Analysts are actually quite confused about whether or not the Fed has indicated that the rate hikes will end soon. Fed Chairman Bernanke’s recent testimony led many to think that a “pause” in the rate hikes was coming. But he later made comments on that subject that his words were misunderstood.

This l eft many scratching their heads trying to figure out what the Fed’s plans are. Hopefully, this post-meeting statement will help clarify their stance and expected moves. Regardless of whether it indicates more hikes are coming or the end is near, I am expecting to see a fair amount of volatility Tuesday afternoon and would not be surprised to see afternoon adjustments to mortgage rates.

The week’s first important release is a big one. Early Thursday morning we will see the release of April’s Retail Sales data. 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 an increase in sales of approximately 0.6%. A smaller than expected increase should push bond prices higher and mortgage rates lower. However, a larger increase could fuel bond selling and lead to higher mor tgage rates Thursday.

Overall, look for Wednesday to be the most important day of the week with the FOMC meeting, but Thursday is also of great interest with the Retail Sales report and 10 year Treasury auction. The rest of the week will likely be fairly calm unless we get some unexpected news on the geopolitical front.

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.

Provided by a la Mode.