Morning stuff

The purchase component of the weekly MBA data reflected no bounce after the Nov 6th extension of the home buying tax credit. It fell 4.7% for the week and is lower for 6 straight weeks at the lowest since Nov ’97 even as the average 30 yr mortgage rate fell to the lowest level since May at 4.83%. We should expect some fence sitters to come off now that the tax credit is alive thru the spring but if it doesn’t in the next few weeks it begs the question of how much demand was pulled forward. Oct Housing Starts are out today. Refi’s fell 1.4% but comes after large gains in the prior two weeks. ABC confidence rose 1 pt to a 6 week high led by the personal finance component which rose to an 11 week high. Ahead of the CPI report at 8:30, y/o/y CPI in Canada rose for the first time since May but in line with forecasts. Today’s y/o/y drop is expected to be the smallest over the past 7 months as the inflation comparisons get much easier. II said bears fell to the lowest since Aug.

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