Just released, the NAHB HMI Index fell 1 point to 15. The index is a measure of Home Builder confidence based on a combined survey from the National Association of Home Builders and Wells Fargo’s Housing Market Index. Economists were looking for a bump to 17 but due to a handful of forces, namely consumer concerns about job security and competitive forces from the foreclosed housing market, gains were not to be had. Earlier today, the Treasury Department’s report on International investment (TIC report) showed solid foreign buying of 19.3 billion. This is encouraging as the total purchases, which includes government buying were at the best level since October 2007. The only lager in this sector was net purchases of corporate bonds which may be a signal that corporate America has squeezed as much margin out of cost cutting, etc. that it can, leading to a better appetite for Uncle’s paper given the bumpy economy. Time will tell.
Bonds, notes, and mortgage backed securities are doing quite well given the plus 100 point gain on the big board. 10 year notes off 7/32’s (yield 3.70%) and MBS off 3/32’s tell the tale of the tape. Technically, a series of higher highs and higher lows are developing on the chart. This is typical of bullish price action and will help to limit the downside (selling). Bulls need a close below 3.68% to prove that further upside (rally) is in the cards. Given the limited data until PPI (inflation index) on Wednesday and Weekly Claims/Leading Economic Indicators on Thursday, odds are good that we will continue to hang around current levels.