Today’s Market Update:

Housing starts were up 9.7% month-over-month in January to a seasonally adjusted annual rate (SAAR) of 1.326m well ahead of the Bloomberg consensus of 1.234m while building permits jumped 7.4% to a SAAR of 1.396m also beating the consensus of 1.300m. The increase in starts was helped by 3.7% increase in single-family units, which totaled 877k. Building permits were driven primarily by permits for multi-unit dwellings; single-family permits dropped 1.7% to 866k. The key takeaway from the report is that it points to more supply coming to a housing market in desperate need of single-family homes.

The Import and Export Price Indexes for January both showed rising prices. Import prices increased 1.0% the most since May 2016. Excluding Fuel, import prices rose 0.5%, which was the largest monthly increase since March 2012. Export prices jumped 0.8%, beating the Bloomberg consensus forecast of 0.3%. The overall report should feed budding inflation concerns.

Despite the economic data yields overall are lower. Two-year Notes are up 0.1 basis points at 2.185%, five-year Notes are down 3.0 basis points at 2.621%, and the benchmark 10-Year Bond is down 4.5 basis points at 2.864%.

Treasury Yields

Term  Current  Last Month
3 Month1.588%1.419%
6 Month1.823%1.591%
2 Year2.185%2.014%
5 Year2.621%2.352%
10 Year2.864%2.537%
30 Year3.114%2.825%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME4.50%
DJIA25,200.37
Crude Oil$61.46
YEN106.1605
Gold$1,355.90
1 Year CMT1.99%
1 Month LIBOR1.58813%
Fed Funds Effective1.42%
Next FOMC MeetingMarch 21, 2018
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurveyActualPrior
2/21/2018MBA Mortgage Applications16-FebN/A-4.10%
Markit US Manufacturing PMIFeb P55.555.5
Markit US Services PMIFeb P54.053.3
Markit US Composite PMIFeb PN/A53.8
Existing Home SalesJan5.62m5.57m
Existing Home Sales MoMJan0.90%-3.60%
2/22/2018Initial Jobless Claims17-Feb230k230k
Continuing Claims10-Feb1935k1942k
Bloomberg Economic ExpectationsFebN/A52.5
Bloomberg Consumer Comfort18-FebN/A57
Leading IndexJan0.70%0.60%
Kansas City Fed Manf. ActivityFeb1816
Source: Bloomberg