The Day Ahead: Housing Starts and Building Permits

Bond markets are slightly stronger after one of the least traumatic overnight sessions in recent memory, both in terms of volume and volatility.  Chinese growth concerns as well as a lack of news and data (i.e. not enough to help yesterday's trends extend further in the overnight session)weighed on risk markets.  Japanese markets were also closed, leaving one less entity in the world today to sell US debt!  10yr yields are down around 4 bps to 2.334 and Fannie 3.5 MBS are up about 10/32nds higher at 102-02.  S&P futures are down about 5 points.  

The day ahead sees just the two industry-specific reports with Housing Starts and Building Permits both at 8:30am and both notorious for margins of error so wide that the data is often officially both positive and negative.  As such, it rarely moves markets much.  Normally, we'd note that  the potential for this is greater on a day where these are the only two reports we'll get, but apart from their traditionally light impact, it also feels like the market is trading more important considerations at the moment.

Building Permits are seen rising to a 0.690 mln unit annual pace vs a 0.682 mln pace last time.  By contrast, Housing Starts are only seen 0.001 mln units higher than January's 0.699 mln unit pace. 

Here's a quick check of the MBS and Treasury markets from MBS Live