By James Brooks

The bond market is up 7/32 (2.37%), which should improve today's mortgage rates by approximately .125 of a discount point.

Today’s only mortgage-relevant event is the first of this week’s two important Treasury auctions. 10-year Notes are being sold today while 30-year Bonds will be auctioned tomorrow. Results will be posted at 1:00 PM ET each day, so any reaction will come during early afternoon trading. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing this afternoon.

There will be two economic releases tomorrow, one of which is much more important than the other. The important report is April's Producer Price Index (PPI) at 8:30 AM ET. It helps us track inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, indicating inflation is not a concern at the manufacturing level, we should see the bond market improve. The overall index is expected to rise 0.2%, while the core data that excludes more volatile food and energy prices has been forecasted to rise 0.2%. A decline in the core data will be ideal for mortgage shoppers because inflation is the number one nemesis for long-term securities such as mortgage-related bonds. As inflation rises, longer-term securities become less appealing to investors since inflation erodes the value of those securities' future fixed interest payments. That is one of the reasons why the bond market tends to thrive in weaker economic conditions with low levels of inflation.

Also coming early tomorrow morning is last week’s unemployment figures. They are expected to show that 242,000 new claims for unemployment benefits were filed last week, up from the previous week’s 238,000. The larger the number of claims, the better the news it is for bonds and mortgage rates because rising claims is a sign of a softening employment sector. However, this is only a weekly snapshot of the sector, so its influence on mortgage rates is often weak unless it shows a significant variance from forecasts. This is especially true when it is being released along with data that is considered to be important.

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... Lock if my closing was taking place over 60 days from now.