US housing starts declined 1.4% month-over-month in December to a seasonally adjusted annual rate of 1.425 million (consensus 1.355 million). Total building permits fell 1.6% month-over-month to a seasonally adjusted annual rate of 1.330 million (consensus 1.370 million) and lowest level since May 2020. Affordability is the major issue; mortgage demand hovers near its lowest level since 1997. That said there was a positive element whereby new single-family starts increased by 11.3% month-over-month. Permits came as no surprise after recent … Continue reading “Unaffordable Real Estate Pushes US Housing Starts Down 1.4% and Building Permits Down 1.6% in December”
Bond Traders Weekly Outlook: US Completes Three Strong Auctions with Spectacular International Demand
U.S. Treasuries closed out the week on a lower note, after two days of strong gains around the December CPI report. Fed Chair Powell’s speech at the Riksbank International Symposium offered no anguish and a strong University of Michigan’s consumer sentiment report finished the week. The four-week bill yield jumped nearly 25 bps to 4.45% amid growing focus on the upcoming debt ceiling debate. The week saw three extremely strong auctions. $18 bln 30-yr bond reopening, $32 bln 10-yr note reopening, … Continue reading “Bond Traders Weekly Outlook: US Completes Three Strong Auctions with Spectacular International Demand”
Bond Traders Weekly Outlook: Treasuries Soar on Soft Data Ahead of CPI and Powell
U.S. Treasuries closed out the first week of 2023 in beastly form Friday following the December jobs report average hourly earnings growth moderating to 4.6% year-over-year from 4.8% in November. It is a key gauge for the Fed and front end led a broad-based rally fueled by short covering. The soft wages data had some kindling thrown on from ISM services and factory orders, both much weaker than anticipated. The US dollar concurred with the Bond market and weakened sharply against … Continue reading “Bond Traders Weekly Outlook: Treasuries Soar on Soft Data Ahead of CPI and Powell”
Bond Traders Weekly Outlook: Yields Rise into Year End
U.S. Treasuries closed out 2022 with higher yields across the curve. The 10-yr note yield held under 3.90%, and the 2s10s inversion remained at 54 basis points. The 2-yr note began the year at 0.73% and settled at 4.42% on the last trading day of 2020, up five basis points. The 10-yr note began the year at 1.51% and closed out the year at 3.88%, up five basis points. For the month ten-year Treasury yields rose 27 bps to seven-week … Continue reading “Bond Traders Weekly Outlook: Yields Rise into Year End”
Bond Traders Weekly Outlook: Pressure Alleviated in 2s10s Spread with BOJ
U.S. Treasuries last week alleviated some pressure on the 2s10s spread, which expanded by 16 bps to -56 bps. The U.S. Dollar Index slipped 0.1% to 104.33, down 0.5% for the week leading into Christmas. Bonds ended the week lower with number of releases, Japan’s November core CPI increased at its fastest yr/yr pace since 1981 in the November. The big event for bonds was the Bank of Japan shocking market by adjusting the central bank’s yield curve control program … Continue reading “Bond Traders Weekly Outlook: Pressure Alleviated in 2s10s Spread with BOJ”
US Building Permits Fell 11.2% in November as Homebuilders Confidence Turns to Despair
US housing starts fell 0.5% month-over-month in November to a seasonally adjusted annual rate of 1.427 million units (consensus 1.395 million), single-unit starts fell even more, by 4.1% to 828,000. Total building permits declined much more than expected 11.2% month-over-month to a seasonally adjusted annual rate of 1.342 million (consensus 1.480 million), with permits for single-unit dwellings dropping by 7.1%. Affordability remains the major issue; mortgage demand remains near its lowest level since 1997. Homebuilders’ confidence is all a low … Continue reading “US Building Permits Fell 11.2% in November as Homebuilders Confidence Turns to Despair”
Bond Traders Weekly Outlook: Europe, Over Tightening with Recession Fears
U.S. Treasuries saw strength in the shorter tenors reflecting a manifestation of inflation related Fed overtightening and forced recession fears. Europe, particularly Italy, is unnerving credit markets which is also giving treasuries a bid. Treasury yields declined this week in the face of a surge in European yields. For the week, two-year Treasury yields dropped a sizable 17 basis points to a more than two-month low 4.18% (down from Nov. 7 high of 4.72%). and the 10-yr note yield fell … Continue reading “Bond Traders Weekly Outlook: Europe, Over Tightening with Recession Fears”
Bond Traders Weekly Outlook: CPI and FOMC on Deck
U.S. Treasuries were lower after a choppy week with longer tenors leading the pullback after outperforming earlier in the week. The 2s10s spread ended the week at -77 bps, one basis point wider from last week’s settlement. What caused the angst? US reports that questioned a less hawkish tone from the fed at next week’s FOMC. Friday, we had a PPI hotter than expectations ahead of next week’s Consumer Price Index We also had an above-consensus preliminary reading of the … Continue reading “Bond Traders Weekly Outlook: CPI and FOMC on Deck”
US Housing Starts Fell Another 4.2% in October as Affordability Crumbles, Building Permits Fall 2.4%
US housing starts declined 4.2% month-over-month in October to a seasonally adjusted annual rate of 1.425 million (consensus 1.420 million) from an upwardly revised 1.488 million (from 1.439 million) in September. Affordability is the major issue; mortgage demand remains near its lowest level since 1997. Building permits dropped 2.4% month-over-month to a seasonally adjusted annual rate of 1.526 million (consensus 1.518 million) from an unrevised 1.564 million). The move suggests disruption and demographic influences. United States Housing Starts October 2022 … Continue reading “US Housing Starts Fell Another 4.2% in October as Affordability Crumbles, Building Permits Fall 2.4%”
US Housing Starts Fell 8.1% in September as Mortgage Demand Collapses, Building Permits Rose 1.4%
US housing starts declined 8.1% month-over-month in September to a seasonally adjusted annual rate of 1.439 million units (consensus 1.465 million). Affordability is the major issue, the weekly MBA Mortgage Application Index declined 4.5%, as mortgage demand hit its lowest level since 1997. Building permits rose 1.4% month-over-month to 1.564 million (consensus 1.550 million). We see continuing weakness in starts and permits for single-family units, which were down 4.7% and 3.1% month-over-month, respectively. The move suggests disruption and demographic influences. … Continue reading “US Housing Starts Fell 8.1% in September as Mortgage Demand Collapses, Building Permits Rose 1.4%”