12/16/09

Good morning. There’s a lot to report today. Rates moved higher yesterday morning as Treasury rates hit their highest levels since August. Obviously volatility picked up, which tends to make mortgage prices a little worse. The news that inflation at the producer level was worse than expected did not help. After that we saw Industrial Production rise in November (the fourth gain in five months) and Capacity Utilization rise also.
This morning we’re off to the races with Housing Starts. Starts were up 8.9% but were still lower than expected. This is the largest percentage increase since May, which is nice to see, and although housing starts are still down over 12% versus a year ago, they are much better than the 54.9% drop seen in January. Single family numbers were up about 2%, but the volatile multifamily segment was up over 67%. New building permits, which give a sense of future home construction, rose 6%, the highest since November 2008. We also had the Consumer Price Index, which rose in line with expectations in November. Prices rose over the last 12 months, as expected, the first year-over-year gain since February. Today we have the Fed announcement, so look for some potential volatility. For now mortgages are about unchanged from Tuesday afternoon.