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MBS Highway Daily Updates 01/19/2023

Current position: Carefully Floating

Stocks and Mortgage Bonds are both lower so far this morning.

NAHB Housing Market Index

The NAHB home builder survey for January increased by 4 points, from 31 to 35. Both present conditions and future expectations were higher. Traffic increased by 3 but is still at a very low level of 23.


"It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales," said Jerry Konter, NAHB chairman and a homebuilder from Savannah, Georgia. "The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023."


-Present conditions - increased 4 pts to 40

-Future outlook rose 2 pts to 37

-Prospective Buyers' Traffic increased by 3 to 23



Housing Starts and Permits

Housing starts in December were down 1.4% to a 1.38M unit annualized pace. Starts are down 22% year over year. Single-family starts, which are most important, were up 11.3% last month at a 909K unit pace. They are still down 25% year over year.

Housing permits, which are the future supply, were down 1.6% last month at a 1.3M unit pace and are down 30% year over year. Single-family housing was down 6.5% last month to 730k units and down 35% year over year.



Initial Jobless Claims

Initial Jobless Claims, which measures individuals filing for unemployment benefits for the first time, fell 15,000 to 190,000. Continuing Claims, or those that continue to receive benefits after their initial claim, increased from 17,500 to 1.65M.



Technical Analysis

Mortgage Bonds are trading in the middle of a range comprising the 101.671 Fibonacci ceiling and a floor at the 25 - day Moving Average. The 10-year has opened up below the 3.431% Fibonacci level, which will now act as a ceiling. If this level holds, yields may move lower to test the 200-day Moving Average for the first time in over a year. Continue carefully floating.


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