Good Friday AM,
Succinct update from Dan Rawitch:
Can somebody please tell me what is going on? How can we have inflation numbers that clearly show a total lack of inflation and then get a Retail Sales read that is so horrible. Retail Sales -1.0 vs expectations of -0.4 Ex Autos -0.8 vs expectations of -0.3. At down -1%, and have the market pull back? From a purely technical point of view, I would have expected the yield to bounce off of the 3.25 level because it is a key support level and it bounced last time. However, the type of bond friendly news we have seen this week, should have provided the downward pressure to break below that level. Now we must close below 3.50 or we will test 3.57. Let’s hope the market comes to its senses later today or Monday. It will not surprise me if it does get better.
The only rebuttal is that the big banks are reporting far better results in Q1 than expected.
That said though, equities are selling off as well and the economy is weakening. This could be some short covering. We will know more soon.
Good snippet from the WSJ on why demand will continue to outpace supply.
Regardless of which data set you trust (I would be between Realtor.com and Fannie Mae at 5.5 mm units), the point is that supply is no where near demand.. What happens to pricing (regardless of the widget we are looking at) when demand outpaces supply? As rates come down, the level of this inequality will grow.
How Severe Is the Housing Shortage? It Depends on How You Define ‘Shortage’
While everyone seems to agree there’s a housing shortage, there’s little agreement on its magnitude. The National Low Income Housing Coalition says the U.S. has a shortage of 7.3 million units, Realtor.com says 6.5 million, and mortgage-finance company Fannie Mae says 4.4 million. John Burns Research & Consulting, a real-estate industry consultant, puts it at just 1.7 million. WSJ’s Josh Zumbrun finds that the variability shows how asking slightly different questions about the same problem can lead to significantly different answers.
Mortgage Rates Post Longest Streak of Declines Since December (Read)
Please remain safe and stay healthy, make today great!