Wednesday’s bond market has opened in negative territory to extend the overall upward momentum in yields. Stocks are showing early gains of 69 points in the Dow and 67 points in the Nasdaq. The bond market is currently down 6/32 (4.49%), which should push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.

There is no relevant economic data scheduled for release today. The only item listed on today’s calendar that was a potential influence on mortgage rates was an early morning Fed-member speech that was uneventful. Bonds have recently shown afternoon weakness. If that trend continues today, we may see some pressure during afternoon trading that may lead to a small upward revision in rates before the end of the day.

Tomorrow brings us four pieces of economic data, including two highly important reports along with a speech by Fed Chairman Powell. The morning will start at 8:30 AM ET with the release of three of the reports. One is the Producer Price Index (PPI) that tracks inflationary pressures at the wholesale level of the economy instead of the consumer level. As with yesterday’s CPI, there are two readings that the markets usually look at. Forecasts are calling for similar results as the CPI, with a 0.3% increase in the overall reading and the core data. The CPI pointed to slightly softer than expected monthly consumer inflation. Good news for mortgage rates would be another round of readings that fall short of predictions.

Retail Sales data for April is the second extremely important report coming tomorrow. It measures consumer spending, which makes up over two-thirds of the U.S. economy. Analysts are expecting a 0.1% increase in sales from March to April and a 0.3% rise if more volatile and costly auto transactions are excluded. If we get declines in the sales numbers, we should see bond prices move higher and lower mortgage rates tomorrow morning, assuming the PPI doesn't show a negative surprise.

Last week’s unemployment update will be the third early morning release. It is expected to show a small increase from the previous week’s 228,000 initial claims for jobless benefits. Rising claims are a sign of weakness in the employment sector. Accordingly, a large increase would be considered good news for mortgage rates. However, keep in mind that this is just a weekly snapshot that will be posted simultaneously as two major reports. In other words, don’t expect this data to have a heavy influence on bond trading or mortgage pricing tomorrow. Traders are likely to be much more focused on the inflation and spending reports.

Fed Chairman Powell is speaking at 8:40 AM ET tomorrow in Washington D.C. The topic is related to monetary policy procedures and not what the Fed may do in this current cycle. Still, anytime he speaks, the markets listen and may react. This is why we are addressing it in today’s report.

Closing out tomorrow morning’s activities will be the release of April's Industrial Production report at 9:15 AM ET. It shows manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts show a 0.1% increase in production, indicating that manufacturing activity strengthened slightly last month. This report draws some attention but not nearly the same level as tomorrow’s other reports.