Wednesday’s bond market has opened in negative territory following the release of stronger than expected inflation readings. The stock markets also have reacted negatively to the news with the Dow down 140 points and the Nasdaq down 27 points. The bond market is currently down 18/32, which will likely push this morning’s mortgage rates higher by approximatel y .250 of a discount point.

The Labor Department brought us the bad news this morning. The released April’s Consumer Price Index (CPI), showing a 0.6% increase in the overall reading and a 0.3% rise in the core data. Both of these readings were slightly higher than analysts’ forecasts, raising inflation fears in the economy. Inflation is considered to be the number one nemesis of the bond market since it erodes the value of a bond’s future fixed interest payments. This leads to lower bond prices and higher mortgage rates.

April’s Leading Economic Indicators (LEI) will be posted late tomorrow morning. This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show an increase of 0.1%, meaning that economic activity is likely to rise slightly during the next few months. A decline would be good news for the bond market and mortgage rates, while a larger than expected increase could cause mortgage r ates to inch higher tomorrow. Also worth noting are public appearances by several Fed members including Fed Chairman Bernanke and former Chairman Alan Greenspan. Mr. Bernanke and Mr. Greenspan will talk publicly tomorrow. If their speeches give any indication of a future Fed move, expect the markets to react accordingly. If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float 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.