Morning Report: Housing starts fall

Posted on October 19, 2022 by Brent Nyitray

Vital Statistics:

 LastChange
S&P futures3,712-20.50
Oil (WTI)83.370.38
10 year government bond yield 4.09%
30 year fixed rate mortgage 6.98%

Stocks are lower this morning after negative comments from Minneapolis Fed President Neel Kashkari. Bonds and MBS are down.

Minneapolis Fed President Neel Kashkari said the Fed may need to push the Fed Funds rate above 4.75% if core inflation keep accelerating. “Core services inflation — which is the stickiest of all — keeps climbing, and we keep getting surprised on the upside.” This, along with accelerating UK inflation put the kibosh on a two day rally in bonds.

Rising rates and home prices continue to depress housing starts. Starts were down 8.1% MOM and 7.7% YOY to a seasonally adjusted annual rate of 1.44 million. Building permits were up 1.4% MOM to 1.56 million.

Mortgage applications fell 4.5% as purchases fell 4% and refis fell 7%. This is the lowest level in 25 years. “The speed and level to which rates have climbed this year have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase market,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Residential housing activity ranging from new housing starts to home sales have been on downward trends coinciding with the rise in rates. The current 30-year fixed rate is now well over three percentage points higher than a year ago, and both purchase and refinance applications were down 38 percent and 86 percent over the year, respectively.”

Fears of a recession and an increase in defaults have pushed up the yields on credit risk transfer securities, which are the insurance for mortgage backed securities issued by Fannie and Freddie. The junk-rated tranches of these securities are now double digits. So far, defaults and delinquencies are under control, but the markets are beginning to show some concern.

Filed under: Economy |

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19 Responses

  1. jnc4p, on October 19, 2022 at 9:33 am said:

    Interesting legal theory:

    Like

    Reply
    • ScottC, on October 19, 2022 at 12:19 pm said:

      McWing:

      Interesting.

      There was a time in the not too distant past when I would have simply assumed that this guy must have been involved in something nefarious, for the FBI to have raided him in such a way. Not anymore. Assuming the Rolling Stone article is true (which, as you say, is itself no small assumption), my default is that it was politically motivated, unless/until it is proven otherwise.

      The FBI is a compromised institution, and deserves no assumption of good faith.

      Like

      Reply
    • jnc4p, on October 19, 2022 at 3:07 pm said:

      ““Most people seeing that green vehicle would think it’s some kind of tank. But I knew it was the Lenco BearCat. That vehicle is designed to be jumped out of so they can do a raid in that kind of time. It can return fire if they’re being fired upon.””

      Yep, that sounds about right for taking down one ABC News reporter.

      Like

      Reply
  5. Let the mutherfuker burn!, on October 19, 2022 at 4:01 pm said:

    Yes, as a matter of fact, it ends midnight the day his election is certified by the GA SOS.

    Like

    Reply
  6. Let the mutherfuker burn!, on October 20, 2022 at 6:09 pm said:

    See, Biden releasing oil from the Strategic Reserve is necessary to assist in his winning in November otherwise all is lost.

    If Republicans capture either chamber raping, killing and cannibalism will be legal at 12:01 AM 11/9/22.

    Like

    Reply

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