NATIONAL MARKET UPDATE
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January Housing Starts dipped 3.6%, but were still up 21.4% from a year ago. Starts rose in the Northeast and West, falling only in the Midwest and South. The 1.567 unit annual rate was the second highest since 2006.
For two months now, starts have hit the 1.5 million yearly rate needed to accommodate population growth and scrappage. Happily, January Building Permits also reached that level, up 9.2% to 1.551 million, a 12-year high!
Existing Home Sales also slipped in January, off 1.3%, to a 5.460 million annual rate, yet still showed a nice yearly 9.6% rise. Sales gained in the South and Midwest, were unchanged in the Northeast, and fell only in the West.
THIS WEEK’S FORECAST
NEW AND PENDING HOME SALES, GDP RISE, PRICES HOLD, CONSUMERS SPEND… We should see January gains in both New Home Sales and Pending Home Sales existing home contracts. The GDP-2nd Estimate is expected to go to 2.2%. The forecast for Core PCE Prices has inflation within the Fed’s target range, while Personal Spending is predicted to show a strong consumer.
NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months… There’s growing sentiment on Wall Street for a quarter percent rate cut at the end of April. Note: In the lower chart, a 19% probability of change is an 81% probability the rate will stay the same.
Current Fed Funds Rate: 1.50%-1.75%
| AFTER FOMC MEETING ON: | CONSENSUS |
| Mar 18 | 1.50%-1.75% |
| Apr 29 | 1.25%-1.50% |
| Jun 10 | 1.25%-1.50% |
Probability of change from current policy:
| AFTER FOMC MEETING ON: | CONSENSUS |
| Mar 18 | 19% |
| Apr 29 | 52% |
| Jun 10 | 30% |
