By James Brooks

The bond market is down 10/32 (2.65%), which should push Raleigh Area mortgage rates higher by approximately .125 of a discount point.

December's Existing Home Sales was this morning's only relevant economic data. The National Association of Realtors announced a 3.6% decline in home resales last month. This was a larger decline than was expected, hinting at a softening housing sector. A weakening housing sector is good news for bonds and mortgage rates, but the fall is being attributed to a record low in the supply of available homes for sale. That has allowed the overnight weakness to take control this morning.

Today also brings us the first of this week's two relatively important Treasury auctions. 5-year Treasury Notes are being auctioned today while 7-year Notes go tomorrow. If these sales are met with a strong demand from investors, the broader bond market may improve during afternoon hours. If they draw a lackluster interest, they could lead to bond selling and higher mortgage rates tomorrow and/or Thursday afternoon. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

There are two reports set for release tomorrow morning. The first will be last week's unemployment figures at 8:30 AM ET that are expected to show 240,000 new claims for unemployment benefits were filed. This would be an increase from the previous week's 220,000 initial filings. Since rising claims is a sign of a weakening employment sector, the higher the number the better the news it is for mortgage shoppers. However, because this is only a weekly report, it usually takes a significant variance from forecasts for the number to directly impact mortgage rates.

December's Leading Economic Indicators (LEI) will also be released, but at 10:00 AM. The Conference Board, who is a New York-based business research group, compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Tomorrow's release is expected to show a 0.5% increase, meaning the indicators are predicting growth in economic activity over the next several months. As long as we don't see a much stronger than predicted increase, I don't think this data will have much of an influence on mortgage pricing either.

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