Morning Report: Rising utility prices increase industrial production

Vital Statistics:

 LastChange
S&P futures4,445-19.2
Oil (WTI)93.721.63
10 year government bond yield 2.00%
30 year fixed rate mortgage 4.16%

Stocks are lower this morning on no real news. Bonds and MBS are flat.

Mortgage applications fell 5.4% last week as purchases fell 1% while refis fell 9%. “Mortgage rates increased across the board last week following the recent rise in Treasury yields, which have moved higher due to unrelenting inflationary pressures and increased market expectations of more aggressive policy moves by the Federal Reserve,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.  Consistent with this period of higher mortgage rates, refinance applications fell 9 percent last week and stood at around half of last year’s pace. The refinance share of applications was also at its lowest level since July 2019.”

Retail Sales rose 3.8% in January, according to Census. This was well above the 2% consensus. Ex-vehicles they rose 3%. On a YOY basis, retail sales rose 13%. December sales were revised downward however. These numbers are not adjusted for inflation.

Single-family rents increased 12% YOY in December, according to CoreLogic.

Industrial production rose 1.4% in January, according to the Fed. Much of this was driven by utilities, which had the highest increase in the history of the index, which goes back to 1972. Not sure what is driving that, as natural gas rose in January, but nothing record-breaking.

Manufacturing production, which strips out utilities, rose 0.2%. Capacity Utilization increased to 77.3%. This is 1.8% higher than pre-pandemic, but below longer-term averages.

Homebuilder sentiment edged down in January, according to the NAHB Housing Market Index.

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