Morning Report: Housing starts disappoint

Vital Statistics:

S&P futures3938-13.4
Oil (WTI)63.88-0.46
10 year government bond yield 1.66%
30 year fixed rate mortgage 3.27%

Stocks are lower this morning as we await the FOMC decision at 2:00 pm. Bonds and MBS are down again.

The FOMC decision at 2:00 will be potentially market moving based on any changes in the dot plot and economic projections. Jerome Powell will have a press conference afterward.

Housing starts came in much lower than expected in February, according to Census. The seasonally-adjusted annual number was 1.42 million, which was down 10% compared to January, and down 9% year-over-year. Building permits also came in low at 1.68 million, which was down 11% MOM but up 17% YOY. This is another disappointing economic number.

The 10 year bond yield continues to rise due to the Supplemental Liquidity Ratio issue, which is set to expire at the end of the month. While these rules are somewhat arcane, they have become a political football in DC. The main point is that eliminating the SLR relief will force the big banks to reduce the size of their balance sheets, which means they will reduce deposits and sell Treasuries. I am wondering if this will come up in the FOMC release or the press conference.

Mortgage applications fell 2.2% last week as purchases increased 2% while refis fell 4%. “Mortgage application activity was mixed last week, as the run-up in rates continues to reduce incentives for potential refinance borrowers,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The 30-year fixed rate increased to its highest level since June 2020, and all other surveyed rates were either flat or increased.”

25 Responses

  1. This is lulz


    • I’d be interested to know your take. The primary takeaway I get is that DC and politicians deserve special protections from the military that normal citizens are not entitled to. And that the summer riots were mostly peaceful while the Capitol riots were mostly insurrectionist.


      • I think it means that the only extremism occurs on the right and that our very way of life is under assault from 73,0000,000 extremists that you’ll eventually be called upon to shoot.


      • And that the summer riots were mostly peaceful while the Capitol riots were mostly insurrectionist.

        The summer demonstrations and the Capitol rally were mostly peaceful but the summer riots and the storming of the Capitol were completely criminal.

        In both cases the crimes were committed by fractions of groups that assembled to rally. In both cases there were some who took advantage of the peaceful lawful demonstrations to do violence and in both cases it appears that there was pre-planning by the criminals.


        • Mark:

          And in one case it was widely and loudly condemned across the political spectrum as well as in the media, while in the other both the media and the Democrats downplayed them as nothing particularly notable or worth condemning. Which I think is the point KW was making.


        • Hell, one was called an “Insurrection”


        • So, China shits all over the U.S. on our own soil using lefty talking points and this is Biden’s response.


        • People at the NYT are about to get cancelled.


        • That’s his response to what the China folks said? Or just him saying things. I guess saying it’s not a Chinese virus, though if that’s the case fine but that doesn’t address hundreds of other issues with China. You can take COVID out of the equation and there’s still hundreds of other substantial objection to both China and our relationship with them.


        • Scott is correct, it’s how it’s being portrayed by the media and let’s say the left rather than Democrats. I would expect that flavor of bias from a partisan political party—but it also seems to be the orientation of the DHS and FBI and other supposedly less partisan government bureaucracies, which is more concerning to me.

          But obviously agreed rioters in neither case should get a pass but the characterization of events as an insurrection or near-government-overthrow has a character of “sure riots in Portland are bad but those only impact the hoi-poloi … riots in the Capitol impact your god-Kings and Queens!”

          That being said, all riots should be avoided. Even if you can argue there’s a good reason to riot I think you should not as they are too easily vulnerable to mob-mentality, violence for its own sake, influence by bad actors, and being set ups for future crack downs.

          But that is just my take, of course.


        • KW:

          Scott is correct, it’s how it’s being portrayed by the media and let’s say the left rather than Democrats.

          I said Dems because, contrary to R’s with regard to the Capitol riot, I am not aware of any of the D party leadership strongly condemning the antifa/BLM riots, and I am aware that many of them did indeed downplay its import. I don’t think the Ds’ and R’s are just mirrors of each other, acting as you would expect partisan political parties to act, in this context.


        • Not sure I would expect the Democrats to act any differently, I just tend to feel it’s the pervasiveness of the beliefs in the institutions (especially DHS, military, FBI, etc) I find more worrying than from Pelosi or Schumer or AOC. That being said the Democratic party appears to have been thoroughly co-opted by the left, to me, and as long as they are trying to pass laws like HR1, etc., they are clearly in an “our ends justifies any means” mode familiar from previous leftist takeovers.

          But even if there’s a red wave in 2022 I don’t see how much that would help (even assuming the GOP would act in good faith as stewards of their constituents) given teh attitude manifesting throughout the government bureaucracy and amplified by the media.


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