The morning has been a rocky start for Mortgage Bonds. While Bonds are attempting to nudge higher off of the Rising Trendline, the volatility has picked up on disappointing economic data as well as reacting to the early sell off in Stocks due to ugly corporate earnings reports.
The disappointing economic data begins with the Initial Jobless Claims which jumped to 589,000 and worse than expectations. It is pretty safe to assume that the job market will continue to get worse in the coming months as corporations cut jobs in order to cut costs.
Housing continues to remain weak, setting records. December figures show that Housing Starts were anemic, falling more than 15%. This takes us to a seasonally adjusted annual rate of 550,000 which is the lowest on record. Building Permits also fell - 12.3% dropping to a record low 363,000. Even total permits, which includes Apartments dropped, setting a record low.
Here's an interesting tidbit to consider, especially if you are in the market for purchasing a new home or working with someone who is....Nationwide, prices of new and existing homes are now just a mere 7% away from being as affordable as they were during the 1980's - a time when the housing market was booming. In the 80's, median home prices equaled 2.9 times the median household incomes. To get some perspective on this, in 2006, at the apex of the housing growth, median home prices sold for about 4.5 times the median household income, and some markets even higher.
The only silver lining from all this negative economic data is that it has for the moment helped Mortgage Bonds improve from their multi-day slide lower. Hopefully a little Fed buying today will help give Bonds a boost.