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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Domestic Flavor:
Taking it to the House: November Housing Starts were higher than expected, 1.427M vs. est. of 1.415M on an annualized basis. Single-Family starts were down -4.1% from 863K to 828K SAAR, which is the lowest since May 2020. Multi-Family starts rose 4.8% from 557K to 584K, highest since April 2022. Building Permits fell short, 1.342M vs. est. of 1.470M and a steep decline from October’s pace of 1.513M and is the biggest MOM drop since the Covid lockdowns.
Central Bank Palooza: The People’s Bank of China kept their key interest rate at 3.65%. The Bank of Japan also kept their interest rate unchanged at -0.1% but decided to modify its so-called Yield Curve Control framework and increase the quantity of government bonds it will buy each month.
On Deck for Tomorrow: Existing Home Sales, Consumer Confidence and a 20Y Treasury bond auction.
The news today, Japan tightened its rate market, finally falling in line with the rest of the industrialized world. It surprised, especially the timing when the world is preparing for year end and holidays. The 10 yr. yield increased 11bps after increasing 10 bps yesterday, 0.20%. MBS prices declined 31 bps this morning then found a little support trading -23 bps the rest of the day. No movement in the rate markets since 9:30 am ET this morning.
Higher mortgage rates continue to take the toll across the housing industry. This morning’s Nov starts, and permits were weaker than in October, and October data also weaker than what was expected at the time. Construction on new U.S. homes fell a seasonally adjusted 0.5% in November to 1.43 million. The drop in construction on homes follows the decline in October, when housing starts also fell by 2.1%.The annual rate of total housing starts fell from 16.4% from the previous year. Building permits for new homes fell 11.2% to 1.34 million in November. The pace of single-family homes fell 4.1% in November and apartments rose 4.8%. Permits for single-family homes fell 7.1% in November, while permits in buildings with at least five units plunged by 17.9%. Single-family starts have fallen in 8 of the last 9 months.
Tomorrow another housing report with Nov existing home sales; the consensus estimate 4.200 mil down from 4.43 mil in October. Look for yr./yr. sales to approach 30.0%. Also tomorrow, Dec Conference Board’s consumer confidence index, expected at 101.0 from 100.2 in Nov. Finally, tomorrow, Treasury will auction $12B of 20 yr. bonds, it usually doesn’t get much attention at 20 yrs., between the 10 and 30.
Researchers at the Federal Reserve Bank of Cleveland and the Bureau of Labor Statistics have a new gauge to measure inflation in rental markets without the lag that has made the data questionable. It is based only on the leases of tenants who recently moved in and compared it with another that measures the average of rents for all tenants. The results, according to a paper this month, show the new-tenant index is now dropping fast from a peak around 12%. The researchers found that their new-tenant data tends to run ahead of BLS housing measures in the consumer price index by about one year, while for the all-tenant measure the gap is about one quarter.
Interest rates not likely to increase much more, today we’ll call the increase a knee jerk reaction to Japan news. On Friday the next inflation reading with Nov PCE, the expectations are another decline. PCE m/m +0.2% from +0.3%, yr./yr. +5.5% from 6.0% in October. Core PCE +0.2% unchanged from October, yr./yr. core 4.6% from 5.0%. The bond and mortgage markets will close early Friday, stocks all day. Next Monday all markets closed for Christmas holiday.
