On the street in front of his house, Shylock reprimands Launcelot for deserting him, and warns Launcelot that Bassanio will be a harsher master than he has been. Then he summons Jessica. Having informed her that he is going to dinner with Bassanio in spite of himself, he instructs her to lock up and keep an eye on the house. He has had a dream that there will be trouble tonight.
Though the Christians seem to think nothing of owing loyalty to a Jew, Shylock believes differently. Just as Antonio overlooked his religious principles to make a deal with Shylock, now Shylock overlooks his religious principles and heads to dinner at Bassanio's because of business.
Launcelot slyly jokes that Shylock will in fact see a "masque" that night. Irritated and not knowing what Launcelot is talking about, Shylock brushes him off and repeats that Jessica should lock the doors and not look out onto the street. In an aside, Launcelot says that Jessica should look out the window—a Christian will come by who will be worth a Jew's eye.
Launcelot, who is in on Jessica and Lorenzo's scheme to elope, can make jokes with her that her father is unable to understand. As Christians (or, in Jessica's case, soon-to-be Christians), they're insiders while the Jewish Shylock is an outsider.
After Shylock and Launcelot leave, Jessica remarks that, if all goes according to her plan, she will have lost a father and he will have lost a daughter.
Jessica reflects that betrayal can sever family ties. From this perspective, family connections are a matter of relationship and legal actions rather than blood.