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This information is provided by Karen Smith, Regional Vice President, US Bank.  Karen has over 25 years of experience in the mortgage loan industry and is a great resource.  Contact her at 765-318-1696 for answers to all your lending questions.

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Housing Starts	Tuesday, May 19, 8:30 am, et	Up 0.4%	Important. A measure of housing sector strength. Weakness may lead to lower rates.
Fed Minutes	Wednesday, May 20, 2:00 pm, et	None	Important. Details of the last Fed meeting will be thoroughly analyzed.
Weekly Jobless Claims	Thursday, May 21, 8:30 am, et	680k	Moderately important. An indication of unemployment. A significantly large increase may lead to lower rates.
Leading Economic Indicators	Thursday, May 21, 10:00 am, et	Up 0.6%	Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey	Thursday, May 21, 10:00 am, et	Down 18	Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Inflation is an increase in the level of prices of goods and services over a period of time. Mixed inflation signs do not generally bode well for mortgage bonds. Inflation erodes the value of fixed income securities generally causing bond prices to fall and interest rates to rise.

The mortgage bond market received mixed inflation data last week. The producer price index, a major gauge of inflation at the producer level, rose a surprising 0.3% in April. This figures was considerably higher than the expected 0.1% increase. However, the core rate, which excludes volatile food and energy, rose 0.1%. This figure was exactly as expected.

The relatively flat core producer price figure helps reinforce the belief that inflation remains in check. However, the higher than expected producer price figure supports the opposite conclusion. Unfortunately the consumer price index data did little to settle the score. Consumer prices were unchanged in April, as expected. However, the core, which excludes volatile food and energy prices, rose 0.3%, higher than the expected 0.1% increase. Higher core inflation readings are usually terrible for fixed income securities such as mortgage bonds. We saw an example of this Friday morning as bond prices fell and interest rates spiked higher erasing some of the recent improvements.

With the mixed data and President Obama recently stating that the US debt load is "unsustainable" the fear of inflation looms. If future data echoes that of the core consumer price data, then it is a real possibility that mortgage interest rates could push higher. However, if future data alleviates some of the recent concerns we could see rates hold steady or even push a little lower. Be aware that floating in this environment is risky. The good news is that mortgage interest rates currently are historically favorable. It is a great time to take advantage of rates at the current levels.