US mortgage applications climb to 11-month high

Published Date 1/16/2019

The 10 yr at 7:00 am ET was at 2.74%, up +2 bp; stock indexes were generally unchanged.

Also at 7:00 am, weekly MBA mortgage applications increased once again, the second weekly increase. The composite +13.5%, purchase apps +9.0%, re-finance apps +19%. The prior week the composite increased 23.5%. Apps are the highest level since April 2010 and applications for refinancing has increased by 19% to the highest volume since March of last year. Unadjusted purchase applications are now 11% higher than in the same week a year ago. The refinancing share of mortgage applications increased 1 percentage point to 46.8%, the highest level in a year. If rates remain at these levels, the outlook for mortgage applications looks promising into the spring.

Redfin is reporting weak December home sales; prices edged up a little in December, marking the smallest annual increase since the end of the last housing crash in 2012. The median home price rose to $289,800 in December, a gain of 1.2%, the slowest monthly pace since March 2012. Sales dropped by almost 11%, the biggest decline for any month since 2016, Redfin said. Previously hot metropolitan areas are cooling fast. “It was like hitting the brakes when you’re going over the speed limit,” Redfin Chief Economist Daryl Fairweather said of the slowdown. “You can’t have prices growing faster than wages year after year.”

At 8:30 am December import prices were expected to be -1.2%. As reported, they dropped -1.0%; export prices were thought to be -0.3%, as reported -0.6%. Yr/yr imports lost -0.6%, down from 0.5% in November; yr/yr export prices added +1.1%, down from +1.9% in November.

Retail sales for December figures were scheduled this morning but were delayed. The same with Nov business inventories. Retail sales are one of the major indicators each month, leaving investors to interpret various private reports about sales. Most of the private looks were strong although not as strong as were expected at the beginning of the holiday shopping season.

British lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin, triggering political upheaval that could lead to a disorderly exit from the EU. A no-confidence vote is set for today; a vote of no confidence sets up the possibility that May and her party would face another general election. The Brexit situation is in turmoil, not because the vote went against Theresa May, but because of the huge margin of defeat (432 to 202). So far we haven’t seen any significant market reactions. The bottom line is whether the Parliament still is willing to exit the EU. While the exit is still set for March 29th, the EU is saying there will be no option to renegotiate the agreement.

At 9:30 am the DJIA opened up +84, the NASDAQ added +15, and S&P was up +5. The 10-yr stood at 2.73%, +1 bp.

At 10:00 am the January NAHB housing market index, expected at 57 from 56 in December increased to 58; the index has dropped significantly since Oct, from 71 to 58 now.

At 2:00 pm we will have the Fed Beige Book report.

The government shutdown is getting more serious each day; the new additional concern is air traffic controllers. TSA is cutting back, increasing travelers frustrations. This shutdown has to end soon. Democrats see this as the first and most important issue that has to be won to cement their leadership in the House. There is no debate about the increasing animosity between Speaker Nancy Pelosi and President Trump. In the meantime, increasingly more people are being affected. This morning the Speaker is asking the White House to delay the State of the Union address until the government re-opens since the Secret Service is being affected by the closure. There has never been a State of the Union address given when the government was closed.

Source: TBWS