NOTE TO SELF: DON’T YAWN IN COURTROOM…a lesson hard learned by a Los Angeles juror last week, who was fined $1000 for yawning, and then adding insult to injury by telling the judge he was “bored”. But last week was far from boring for Bonds and home loan rates, largely due to some scares about inflation. Inflation erodes the value of a Bond, so Bonds and therefore home loan rates dislike news of inflation with a passion…and stay awake when inflation rears its ugly head.

Now early in the week, Bonds and home loan rates had improved as a result of the high-impact Producer Price Index (PPI) Report, measuring inflation on the producer side. And interestingly enough, Bonds didn’t react negatively to the PPI number coming in slightly higher than expected, which typically would be an inflationary signal and bad for Bonds and home loan rates. Upon taking a closer look, Traders saw that the “core” PPI number, which excludes food and energy costs such as oil, actually came in lower than expected. So knowing that oil prices have declined lately, they felt that the inflation seen in the headline PPI number was likely due to the high price of oil during that time period.

But then…along came the Consumer Price Index (CPI) Report on Wednesday. The CPI measures inflation at the consumer level, and the numbers showed that consumer prices rose at a faster pace during March than has been seen in the past two years. And the “core” rate rose twice as fast as expected, which is important because the core rate excludes oil. So unlike the Producer Report, the Consumer Report shows some realistic inflationary signals outside of higher oil prices. Bonds lost the ground they had gained early in the week, and home loan rates ended the week basically unchanged.

EVER BEEN MADLY SEARCHING YOUR COMPUTER FOR THAT ONE CERTAIN EMAIL OR FILE YOU NEED, YOU KNOW YOU HAVE IT SOMEWHERE…BUT FEEL LIKE YOU MIGHT AS WELL BE LOST DEEP IN THE BRAZILLIAN JUNGLE? SWEAT NO MORE…NEW TOOLS ARE AVAILABLE TO HELP YOU QUICKLY AND EASILY FIND WHAT YOU NEED – AND MOST OF THEM ARE FREE. DON’T MISS THIS WEEK’S MORTGAGE MARKET VIEW.

And don’t worry about needing a triple espresso to stay awake during the week ahead – it should be far from a sleeper, loaded with a pack of important economic reports, including a look at the housing sector with Existing Home Sales on Monday and New Home Sales on Tuesday.

Bond Traders will also watch activity in the Stock market, which has had a very rough ride over the past few weeks. Remember that money tends to flow back and forth between the Stock and Bond markets based on the news and conditions of the day. For example, if a piece of good economic news is released, showing a strengthening economy…this is good news for business and industry across the board, so investors want their money in Stocks, which will generally improve based on the positive news. While investors certainly will inject new money into the market, most movement is directly between Stocks and Bonds – therefore when an investor wants money in Stocks, they will pull money out of Bonds. When money comes out of the Bond market, Bond prices worsen, causing home loan rates to rise.

The reverse is also true. When negative economic news is released, it makes investors want to pull money out of businesses and industries that might be going soft; and instead move money into the stable, safe haven of Bonds with a fixed, known return – especially in an environment without inflationary pressures. In recent weeks, Bonds and home loan rates have been the beneficiary of a troubled Stock market.

If Stocks begin to improve based on the news of the coming week, Bond prices and home loan rates are likely to suffer, so a cautious eye on rates is advisable at this time.

But here’s a “Wild Card” – rumors are that North Korea is looking to engage in nuclear bomb testing. Geopolitical scares and uncertainties of this type tend to be bad for stocks…so if more news breaks on this story, Bonds and home loan rates could see improvement as money moves from stocks on a “flight” to stability and safety in Bonds.

“BUT I STILL…HAVEN’T FOUND…WHAT I’M LOOKING FOR” (U2)

Has your computer got you singing the blues? How frustrating is it to know that somewhere on your computer, seemingly hiding from you, is that file or email that you need right now…but you just can’t find it! Did you know that there are desktop search programs you can install that will instantly search your computer for a “missing” email or file, in the very same way that search engines will scour the Internet?

Google, MSN, and Yahoo! all offer FREE downloadable programs that will do just that. These desktop versions work in much the same manner as their Internet programs, so if you’re comfortable with one particular search engine…you’ll probably like the desktop version as well. There are several other programs offering additional features, some free and others that you’ll have to open up your wallet for. Some worth considering are Copernic and X1. The ease of use and amount of time saved is incredibly valuable.

But be aware, these programs also mean that anyone who has access to your computer can tap into your private files and Internet travels. However, you can generally adjust the settings on the programs to define what is accessible on your searches or to leave password-protected sites out.

One final thought, if you ever use a public computer, check to see if it has a desktop search engine installed. If it does, pause or disable the search tool while online, or stay out of web sites you don’t want someone else looking at or having access to. Smartest yet and safety first – don’t use that computer at all.

This week will see a good number of economic reports, including several high impact releases that are likely to shake up the financial markets. On the heels of a weak Housing Starts number recently, it will be interesting to see Monday’s Existing Home and Tuesday’s New Home Sales numbers.

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

For the week of April 25 – April 29