Morning Report: Housing starts disappoint again

Vital Statistics:

 

Last Change
S&P futures 2999 -1.25
Oil (WTI) 54.47 0.44
10 year government bond yield 1.75%
30 year fixed rate mortgage 3.97%

 

Stocks are lower this morning on weak overseas growth. Bonds and MBS are flat.

 

Housing starts disappointed again, falling 9.4% from an upwardly revised August number to 1.26 million units. This is up slightly on a YOY basis. Building Permits came in at 1.387 million units, higher than expected but still down 2.4% on a MOM basis. Compared to last year, they are up 9.4%.

 

Despite the disappointing starts, builder confidence hit an 20 month high. “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB Chief Economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.”

 

Industrial production fell 0.4% in September, and manufacturing production was down 0.5%. August’s numbers were revised higher. Capacity Utilization fell to 77.5%. Tariffs are attributed to the slowdown, but overseas growth in general is weakening. Note China had the lowest GDP growth since the early 1990s. The global slowdown has increased the odds of another rate cut in two weeks, which is up to 87% compared to 28% a month ago.

 

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