AM Market Update

Jan housing starts, permits and PPI were reported at 8:30. Starts were down 16% to 880K from a solid revision higher in Dec from 999K units to 1.048 units, permits were down 5.0% to 937K units against forecasts of 975K. Both starts and permits were much weaker than estimates, still about the weather, but as noted yesterday we are suspicious of recent data and the constant blame on weather issues. 

Where I question all the blame being directed on weather is that economists and analysts, those who are charged with the forecasts and estimates that in turn set up traders and investors, are not living in a cave somewhere. The weather and its impact should be taken into consideration when developing a consensus; certainly economists do take all issues into their thinking, yet recent economic reports are consistently worse than those ‘consensus’ estimates have suggested prior to the release of the actual reports. 

The two reports at 8:30 didn’t generate any changes in the stock or bond markets from where they traded prior to the data. The 10 yr continues to inch lower in rates and MBS prices continue to edge a little higher in what is a generally flat rate market. The DJIA opened -28 at 9:30, NASDAQ -7, S&P -4; 10 yr 2.68% -3 bps and breaking its recent trend line and remaining under the key short term and longer term averages. 30 yr MBS price at 9:30 +21 bps from yesterday’s close.

A report showed the U.K. unemployment rate unexpectedly rose to 7.2% in the fourth quarter, the first increase since February last year, from 7.1 percent in the three months through November, the Office for National Statistics said. The median economist estimate called for no change. In January, jobless claims fell 27,600, more than economists had forecast.

Possible civil war in the Ukraine? The increase in protests and violence is one support for the US treasury market this morning. Ukraine’s crisis deepened as a western region declared independence from the central government, while neighboring Poland’s prime minister warned of civil war and European Union leaders threatened sanctions.

Another week of decline in mortgage applications. Mortgage applications decreased 4.1% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 14, 2014. 
There is little reason to lock your rate today, but I would stay focused and look to lock tomorrow.