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Housing Starts improved 10.5% in August, again on the back of the multi-family market, which rose by 39,000 annualized units or 32%. Single-family starts grew by 18,000 or 4.3% in August. Building Permits moved 5.6% higher with single-family permits actually declining by 5,000 units while multi-family permits rose by 15,000 annualized units....

Good Morning. 830am data has been released. Housing Starts were much worse than expected as were Building Permits. The yield curve is flatter and the benchmark 10yr note yield has extended overnight gains after the data release, currently -5.5bps at 3.253%. Rate sheet influential prices are higher and yield spreads are wider after the data. The FN 4.0 is currently +0-10 at 99-24 and the FN 4.5 is +0-08 at 102-20. The secondary market current coupon is 4.6bps lower at 4.057%. Whether or not this interest rate rally sticks is a function of the stock lever. Currently S&P futures are -7.00 at 1102.25. The S&P finds support at 1100 at 1096. If these levels hold and buying accumulates...interest will likely retest higher levels. ...

Consumer level inflation was "on the screws" while Building Permits were better than expected. 10s havent made much progress in either direction after the data and the FN 4.5 has cheapened up a few ticks but is essentially unchanged. The market may go into a holding pattern until 2:15 when the FOMC statement is released. It may also improve after much weakness has been priced in over the past few days....look for 10s to test 3.57. ...