Interest rates are higher and stock futures are falling ahead of housing starts and building permits data. Further clarity on the Federal Reserve’s QE plan should also be forthcoming with five different officials on the speaking circuit today.
Ninety minutes before the opening bell, S&P 500 futures are 7.25 points lower at 1,171.00 and Dow futures are 39 points lower at 11,006.
The 10 year Treasury note is -0-06 at 100-24+ yielding 2.536% (+2.1bps). The 2s/10s curve is 2.35bps steeper at 217.15bps. The December delivery FNCL 3.5 MBS coupon is -0-01 at 100-24. The December FNCL 4.0 is -0-01 at 103-00.
Light crude oil is trading 1.40% lower at $81.91per barrel while gold prices are off 1.03% to $1,354.10 per ounce. The US$ index is up 0.94% to 77.654
The dip in stocks we are seeing today looks especially mild compared to what happened on this day 23 years ago: the Oct. 19, 1987 stock crash pushed the Dow 22.6% lower.
Aside from new data and important Fed speeches, some major Q3 earnings reports are also due, including financial behemoths Goldman Sachs and Bank of America, plus Yahoo!, Coca-Cola and J&J.
Key Events Today:
8:30 ― Housing Starts, which track new construction of single- and multi-family homes, are expected to fall to an annualized pace of 580,000 in September, down from 598,000 a month before. Building permits, which anticipate starts by a month or two, should also come in at 580,000, versus 571,000 in the month before.
Single-family housing permits declined for the fifth straight month in August, which points to a decline in single-family starts in September, said economists at IHS Global Insight. The forecasting firm said multifamily starts are also likely to drop after gaining 32% in August.
“Overall, we expect that housing starts dropped about 5.5% this month, to 565,000. We are expecting a small gain in permits, however, because the economy is growing and slowly adding jobs.”
Meanwhile, economists at BBVA predict housing starts will grow to 610,000 new units, marking a third consecutive advance. They noted that builders’ confidence is stable and new home inventory hit its lowest registered level recently, which could stimulate new activity. “The pick-up in housing starts in recent months points to recovery,” they added. “Nevertheless, economic conditions indicate that the recovery will be slow.”
9:40 ― Charles Evans, president of the Chicago Fed, speaks on the economic outlook to civic leaders in Evanston, IL.
12:30 ― Richard Fisher, president of the Dallas Fed, speaks to the New York Association for Business Economics in New York.
1:20 ― Narayana Kocherlakota, president of the Minnesota Fed, gives a luncheon speech on “The Tools of the FOMC” to business leaders in Fargo, North Dakota.
4:00 ― Ben Bernanke, chairman of the Federal Reserve, gives brief remarks before the Grand Opening of the Junior Achievement Finance Park in Fairfax, Va.
7:00pm: ― Elizabeth Duke, governor of the Fed, delivers a talk called “Come With Me to the FOMC” before a Money Marketeers of New York University dinner.
Treasury Auctions:
- 11:30 ― 4-Week Bills
- 11:30 ― 52-Week Bills
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