June housing starts and permits exceed expectations

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Published Date 7/17/2024

Treasury yields declined yesterday but MBS prices hardly changed. The 10 year note declined 7 bps, the 2 year down just 3 bps. At 8 am ET this morning the 10 yield +2 bps from yesterday’s close while the 2 year note increased 6 bps. MBS prices began the day -8 bps from yesterday’s close.

Weekly MBA mortgage applications last week, the composite +3.9% after -0.2% the prior week, purchase application though declined 2.7% from +1.0%, and 14% blow the same week a year ago, re-finance’s boomed, +15.2% from the week before -2.2% decline. It was the largest week-to week increase in re-fis in 2 years.

June housing starts, expected at 1.305 million increased to 1.353 million from an upward revision in May (from 1.277 million to 1.314 million), an increase of 3.0%. Building permits expected at 1.395 million jumped to 1.446 million from the May revision from 1.386 million to 1.399 million, +3.4%. The increases in starts and permits includes multi-family data; single family starts declined 2.2% to 980K units while permits for single family slipped 2.3% to 934K units. Single-family housing starts increased 5.4% on a year-on-year basis in June.

At 9:15 am June industrial production increased 0.6%, twice +0.3% estimates, manufacturing forecast was an unchanged estimate from May but increased 0.4%. Capacity utilization (factory use) thought to be 78.5% increased to78.8% the highest usage in many months, but May was revised to 78.3% from 78.7%.

At 9:30 am the DJIA opened -52, NASDAQ -304, S&P -55. Yesterday it was the DJIAs turn to make a strong move, +743, today its NASDAQs turn to make a strong move, -304 after essentially unchanged yesterday.

At 9:30 am the 10 year note at 4.19% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -11 bps from yesterday’s close and -3 bps from 9:30 am yesterday; the 6.5 coupon at 9:30 am -11 bps from yesterday and -8 bps from 9:30 am yesterday.

Next up today, at 1 pm Treasury will auction $13B of 20 year bonds, normally it doesn’t excite but last month’s 20 year bond auction was met with very strong demand, one of the strongest treasury auctions recently.

At 2 pm the Fed’s Beige Book, a more detailed look at the 12 Fed districts.

Over the last few sessions, the 10 year note has dipped from 4.24% to yesterday’s close at 4.16%, this morning the 10 at 4.19% +3 bps. As the note yield inched lower there was a noticeable lack of improvement in MBS prices, not much over the last few sessions. Today though MBS prices under pressure as traders and investors are backing away after not much recent improvement.

Source: TBWS

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