Succinct Summation of the Week’s Events:
Positives:
1. Jobless claims totaled 235k, lowest level since 1973, well below the estimate of 257k.
2. Retail sales in October jumped 0.8% month over month, double expectations. September and August were each revised up by 0.2. Online sales rose 1.5% m/o/m and are up 10% y/o/y.
3. Housing Starts for October totaled 1.32mm, well over 1.156mm estimates, and the best level since August ’07.
4. NAHB November builder survey index was unchanged at 63 as expected, remaining well above 50. This number though came before the jump in interest rates and the same can be said for housing starts.
5. Producer prices were benign in October, flat m/o/m and up just 0.8% year over year.
Negatives:
1. 10 yr yield spiked by about 50 bps and the 10 yr inflation breakeven is higher by 20 bps to the most in 18 months.
2. Headline CPI in October jumped 0.4% m/o/m; Energy price gains drove y/o/y CPI gain up 1.6%, Food prices were flat m/o/m but down 0.4% y/o/y.
3. Input prices rose 0.5% m/o/m in September, the most since June as petro prices jumped by 7.5%, now up 4.5% y/o/y.
4. No change in US industrial production in October, and September was revised down by 3 tenths.
5. September saw the largest month of net foreign selling on record of US notes and bonds, totaling $76.6B, dating back to when record keeping began in 1977. Total selling past year was $310B.
6. Mortgage rates, mortgage applications to buy a home fell 6.2% w/o/w as of November 11th. Refi’s fell by 11% w/o/w but remain up by almost 19% vs last year because one year ago the average 30 yr mortgage rate was around 4.15%. The average 30 yr mortgage rate this past week jumped 18 bps on the week to 3.95%, a level last seen in January.
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