Morning Report - Housing Starts dip

Vital Statistics:

	Last	Change	Percent
S&P Futures	1973.9	-9.3	-0.47%
Eurostoxx Index	2951.0	-31.9	-1.07%
Oil (WTI)	54.29	-1.6	-2.90%
LIBOR	0.243	0.002	0.94%
US Dollar Index (DXY)	87.81	-0.647	-0.73%
10 Year Govt Bond Yield	2.06%	-0.06%
Current Coupon Ginnie Mae TBA	104.9	0.0
Current Coupon Fannie Mae TBA	104.4	0.2
BankRate 30 Year Fixed Rate Mortgage	3.98

Stocks are lower as oil continues to fall. Bonds and MBS are rallying hard.

Euro yields are continuing to move lower. The German Bund is currently trading at 57.6 basis points. It began the year at close to 2%. Think about that for a moment. FWIW, the trader in me is starting to think about a capitulation low in rates. Which means we are ripe for a snap-back in yields. LOs, I know this is a dead period of the year, but there might be some refis to be had with the us 10 year yield falling towards 2%. I don't know how long this gift lasts.

Another observation is that we are getting close (40 basis points or so) to the lows set before the the Fed hinted that QE was ending. If we are getting this sort of movement in rates without QE, it does beg the question of whether QE was effective in the first place.

The Russian Ruble fell to a record low as the Russian Central Bank raised interest rates to 17%. The ruble has been slammed by a combination of low oil prices and international sanctions over Ukraine. The last stop is capital controls. The swoon in oil prices has hit Russia and Venezuela particularly hard. 

Housing starts fell to 1028k in November from an upward revised 1045k. Building Permits fell from 1092k to 1035k. For once it was single fam that accounted for most of the decline - multi-fam actually rose. Note that weather may have affected the numbers as winter storms arrived early this year for the upper Midwest and New England. 

The FOMC meeting begins today. The decision will be released tomorrow at 2:00 pm. 

The Buildfax remodeling rate came in at just under 4 million, which is 4% below September and is 10% higher than a year ago. Activity continues to be strongest in the South and West, with the Midwest and Northeast lagging.