Oil prices are a little lower this morning on news that Pete Hegseth said the US ceasefire with Iran remained in place, easing fears that the region would see continued escalation after Iran attacked the United Arab Emirates.
Iran’s attacks on the UAE apparently came in response to the US launching Project Freedom, an effort to escort commercial ships out of the Gulf. Hegseth said two US commercial ships were successfully escorted, saying that the route is clear.
Cotality Home Price Insights
Cotality reported that home values rose 0.4% YoY in March after a 0.5% increase in February. They are forecasting that homes will appreciate by 5.1% in the year ahead, which is an upgrade from their previous report of 4.7%. They are clearly very bullish on housing and this is an opportunity you should quantify and explain to your customers.
New Home Sales
The Census Bureau released their February and March New Home Sales data, finally catching up after the shutdown.
Both months were stronger than expectations. Sales in February rose 9% MoM, while sales in March rose 7.4%, for a combined 17% jump from January.
In February rates were low, but in March, they rose by roughly 5/8%. This shows some resilience in the new home market.
The media focused on the fact that the median home price fell, explaining that builders were cutting prices due to the market. However, upon further inspection, the average cost per square foot remained stable. Builders are building cheaper homes, and the median home price measures the middle priced home that sold…so it’s skewed by the mix of sales. And when looking at the mix, there was a big increase in homes sold beneath $500,000, and a decrease in homes sold above $500,000, explaining the decline.
JOLTS
The BLS released their JOLTS (Job Openings and Labor Turnover) report for March, showing that there was 6.87M job openings. This is a slight decline from the February report, which was revised higher to 6.92M, and right in line with expectations.
While this is a volatile number it has still been in a longer-term downtrend. This figure was below 7.2M in January.
Within the report, the hiring rate rose from 3.1% (lowest level since 2011 when removing covid impact) to 3.5%. It’s still low, but an increase, and something to look out for as we approach jobs week.
The Quits rate rose from 1.9% to 2% but has been in this very low range. It does show some weakness, as employees are not voluntarily quitting as much because there is much less poaching from other companies due to less hiring.
BED
The BLS released their Q3 Business Employment Dynamics report (BED), which revises the BLS’ birth/death model within their Jobs Report. Over the course of Q3, the Birth/Death model showed that there were 145,000 jobs created, meanwhile, the BED showed 272,000 job losses. That means from this one component of the jobs report, the BLS overstated job growth by 417,000 jobs on a non-seasonally adjusted basis.
Remember: Their QCEW report showed that they overstated job growth by 90% last year…so they continue to overstate job growth, only to revise it much lower later. For this reason, they have lost a lot of credibility. We will see how the figures shape up on Friday.
ISM Services
The ISM Services report was reported in line with estimates at 53.6, but the internals were interesting.
The employment component improved a bit from 45 to 48, but remained beneath 50 and in contraction. The prices paid, which is a measure of inflation, remained at a high level of 71, which is the highest level since 2022. Clearly, the impact of the oil shock is showing up here.
Technical Analysis
Mortgage Bonds ended the day yesterday beneath support at 100.35. That level is acting as resistance this morning. Bonds attempted to break above it, but were stopped in their tracks thus far. We must remain on guard, as the next floor of support is down at 99.99, roughly 34bp beneath present levels.
The 10-year is a little lower today, but continues to trade in a very wide range between support at 4.33% and overhead resistance at 4.48%. The negative stochastic crossover was invalidated with yesterday’s move.
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