Rates are flat this morning as the market responds to mixed messages in the economic data. The 10-year Treasury is -.008% which moved the rate to 4.704%. If the benchmark bond stays above the 4.700% or 4.750% marks for long it will become the new floor. Hopefully the market will move rates lower today.

The market opened with the home construction report. 1528k Housing Starts were above the 1475k to 1500k expectations. That should have driven rates up. But the attached forward looking Building Permits were 1429. That was far below the 1520k to 1530k.

The weekly Mortgage Bankers Association Purchase Application Index halted the growing trend it has seen the last 5 weeks. Last week it was 438.3. It was just below that level this week at 432.3. The more important 4-week moving average is still trending upward to 427.23. It is hard to say how much attention the bond market gives this item.

The combination of housing data caused the 10-year Treasury note to open .022% lower than yesterday’s close. The Production report reversed that trend.

Productivity was +0.7%, higher than the predicted +0.1% to +0.3%. Capacity was at the high end of expectations but appears to have caught the bond market’s attention. It was 81.6% which was above the expected 81.4 % to 81.6%

Tomorrow will be posted later today.

Steve Boxmeyer [612] 799 – 6858
steve@LendWithIntegrity.com