By James Brooks

The bond market is up 21/32 (1.99%) which should push today's mortgage rates lower by approximately .250 of a discount point.

The benchmark 10-year Treasury Note yield is below a very important threshold of 2.00%. It will be interesting to see if it remains below that level. Doing so opens the possibility of more improvements in the near future, driving mortgage rates lower also. On the other hand, if 2.00% is too strong of a resistance level and we close above it, this downward move in mortgage rates may be coming to an end very soon. The next day or two will be key in determining which direction we are heading.

There were two economic reports released this morning. The first being December's Consumer Price Index (CPI) at 8:30 AM. It showed that the overall CPI reading fell 0.1% while the more important core data rose 0.1%. Both readings were 0.1% weaker than forecasts, indicating that inflationary pressures at the consumer level of the economy remained subdued. This is good news for long-term securities such as mortgage-related bonds because rising inflation erodes their value and makes them less appealing to investors.

Also posted early this morning was December's Housing Starts that showed a 2.5% decline in new home groundbreakings. Analysts were expecting to see an increase in starts, so the data hints that the new home portion of the housing sector is softening. That makes the data favorable for bonds and mortgage rates. However, this data is not considered to be of high importance, limiting its impact on today's rates.

Tomorrow's only data is last week's unemployment update at 8:30 AM ET. It is expected to show that 280,000 new claims for unemployment benefits were filed last week, down from the previous week's 284,000 initial claims. This report usually doesn't cause much movement in the markets or mortgage rates unless it shows a significant jump or drop in initial claims for benefits. The higher the number of claims, the better the news it is for bonds and mortgage rates.

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.