Good Wednesday Am on this best day of the week,

Bonds are still dicey.

While very oversold, I am not sure that we have found bottom yet. Yesterday confirmed that concern when Mortgage Bonds broke below two level of support. The ten-year has run up and tested the Fibonacci 61.8 level, which is a yield of 3.94%. The ten-year is currently 3.90%, which is better but not out of the woods! If we do not hold, there we will likely test 4.10. At the moment the market is bearish which means that any news released, will likely first be viewed as a glass half empty. On Friday, the PCE numbers will be released. If they come in hot, we will likely see bonds get much uglier and test the worst levels we have seen. Let’s hope this does not happen!

Traders preparing for Federal Reserve minutes today that could shed light on whether any officials anticipated the need to take rates higher than previously thought to tame persistently high inflation. Minutes of the meeting, at which officials voted unanimously to raise rates by just a quarter percentage point, will come at 11am (less than 30minutes).

The U.S. housing market weakened in January for the 12th straight month.

Low inventory and low demand (due to higher rates) . Sales of previously owned homes, which make up most of the housing market, fell 0.7% in January from the prior month to a seasonally adjusted annual rate of 4 million, the slowest since October 2010, the National Association of Realtors said Tuesday. January sales fell 36.9% from a year earlier. January’s decline marked the longest streak of back-to-back monthly declines on record in figures going back to 1999, Nicole Friedman reports. Some may see this as glass half empty but it is not, it is glass half full. So much pent up demand. There are expected to be 1.9mm new households formed this year. Where are they going to live? Let’s focus on that. People need our help.

Speaking of housing demand, Dr Elliott Eisenberg shared that: 

In 22Q4, for the first time since at least 1974 when data became available, the quarterly number of housing units built-for-rent at 133,000 exceeded the number of single-family units built-for-sale at 126,000. Historically, the only times these numbers came close were during the recessions of 1982 and 2008/09 when single-family production collapsed. Single-family built-for-sales starts are down about 40% from their recent peaks, built-for-rent activity is nearing its 1986 high.

Please remain safe and stay healthy!