Am Texas Real Estate and Mortgage Market Update

Early activity this morning had the stock indexes a little better in the futures markets and interest rate markets generally unchanged. At 8:30 the Feb NY Empire State manufacturing index was expected at 8.0 frm 12.51 in Jan, as released the index was weaker, at 4.48. More weather interference? Or more indication the economy is slowing? Every recent measurement on the manufacturing sector has been weaker than estimates as was Jan retail sales and the housing market; no doubt the inclement weather has had a negative influence on the economy but how much is being questioned. Economists and analysts that come up with the estimates that markets use to measure the reports and drive direction in stocks and bonds still can’t accurately assess the weather impact. 

Japan announced it would continue to boost its lending programs in a valiant attempt to cut its deflation that has plagued the Japanese economy for 20 years. The yen declined against the dollar as a result of more easing in the country and continued evidence Japan will drive down the value of its currency to increase exports. There has been scant news in the last two weeks about the currency war that is still out there; many emerging markets and larger economies like China are scrambling to increase exports. It was the global reaction to Japan’s money printing that eventually led to the decline in interest rates and the drop in stock indexes. Since the initial reaction markets have settled down and rates have increased as has the stock market; the yen is seen to decline to 112 yen/dollar in the next few months, we expect 120 yen/dollar by this time next year.
This Week’s Economic Calendar:
         Tuesday,
              8:30 Feb NY Empire Sate manufacturing index (8.0) as reported 4.48 frm 12.51 in Jan
              10:00 Feb NAHB housing market index (56) as reported
         Wednesday,
              7:00 am weekly MBA mortgage applications
              8:30 am Jan housing starts and permits (starts -4.9% at 950K; permits -1.2% at 975K)
                           Jan PPI (+0.2%; ex food and energy +0.1%)
              2:00 pm FOMC minutes frm Jan FOMC meeting
         Thursday,
              8:30 weekly jobless claims (-4K to 335K)
                     Jan CPI (+0.1%; ex food and energy +0.2%)
             10:00 Feb Philadelphia Fed business index (8.0 frm 9.4 in Jan)
                      Jan leading economic indicators (+0.2%)
         Friday,
             10:00 Jan existing home sales (-4.5% at 4.65 mil annualized)


The bond and mortgage markets still hold very minor bullish biases; better to look at them as neutral---neither bullish or bearish. Unlikely that rates will decline much frm present levels as long as the stock market manages to avoid another bout of strong selling. Another way to look at it is, uncertainty about the economy that rules presently is due to bad weather. The drag because of lousy weather won’t be clear until well into Spring; even then as spending picks up the sustainability of the bounce will be questioned.