By James Brooks

The bond market is currently down 8/32, but due to strength late yesterday we should see today's mortgage rates very close to yesterday's morning levels.

We saw strength in bonds yesterday afternoon following a strong 30-year Bond auction. Several benchmarks we use to gauge investor demand levels showed strong interest in the securities. Almost immediately after results were posted at 1:00 PM ET the bond market strengthened, leading many lenders to improve mortgage pricing. Unfortunately, today's losses erase that improvement, leaving us with little change from Thursday's early pricing.

The first of today's two relevant economic reports was May's Producer Price Index (PPI) at 8:30 AM ET. It showed that the overall index fell 0.2% while the core data reading that excludes more volatile food and energy prices slipped 0.1%. Both readings were well below forecasts of up 0.2% and up 0.1% respectively, indicating that inflationary pressures at the producer level of the economy were much softer last month than many had thought. Because inflation is the primary nemesis of long-term securities such as mortgage-related bonds, we can consider these readings good news for mortgage rates.

June's preliminary reading to the University of Michigan's Index of Consumer Sentiment was posted late this morning, revealing a reading of 81.2. That was a smaller number than forecasts were calling for and a decline from May, meaning surveyed consumers were less optimistic about their own financial and employment situations than they were last month. Because waning confidence often causes consumers to delay making a large purchase, limiting economic growth, this reading is favorable for bonds and mortgage rates. Apparently though, bond traders don't seem to be impressed by either of today's reports.

Next week appears to be an active week for the financial and mortgage markets with a couple pieces of economic data scheduled, followed by another FOMC meeting that will include a Fed press conference and revised economic projections. All of the events are scheduled for the first couple days, leaving the markets to be driven by other sources the latter days. Look for details on next week's schedule in Sunday evening's weekly preview.

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.