Besides lots of Fed chatter we clarified yesterday, this week is slow for news. Stocks and bonds are both stuck in tight trading ranges on the upside and downside.

The mortgage bonds that most lenders price rate sheets from (FNMA 30yr 4% coupon) have been between the 25 and 50 day moving averages for eight straight sessions, and the S&P 500 can’t seem to close above 1331. Rates continue to be extremely low, and the question is when bonds break out of this range, which way will it be?

As oil and commodity prices continue rising, an inflationary bias is building in the marketplace and we’ll see another parade of Fed officials talking tough about inflation this week. However, tomorrow’s minutes from the March 15 FOMC meeting will remind us that talk is cheap since every FOMC member voted for zero-rate policy and a continuation of QE2.

Still, FOMC minutes sometimes reveal fine print behind the voting, and traders will be combing the minutes for inflation concerns. Also markets are mostly assuming a rate hike at Thursday’s European Central Bank meeting.

Investors tend to sell bonds on inflation concerns because inflation erodes buying power of a bond’s future cash flows, and rates rise when bond prices drop in a selloff.

All this said, rate markets continue their wild daily volatility, which can provide opportunities for consumers who are paying attention—or at least if their advisors are paying attention. Mortgage bonds are up 31 basis points this morning for no particular reason, and this kind of rally creates great but probably short-lived rate opportunities.