A drop in mortgage rates led to a big spike in mortgage applications in the April 11 week. MBA mortgage applications jumped +4.3% vs. -1.6% prior. Purchases slowed to +1.3% vs. +2.7% prior, refinancing jumped +6.9% vs. -4.9% prior and the average rate for a conforming 30-Year fixed mortgage fell -9 bps to 4.47%. Housing starts picked up in March, however disappointed expectations posting 946K against consensus of 970K. Overall Housing starts rose 2.8 percent (consensus +7%) after a 1.9 percent increase in February. Single family starts jumped +6% vs. +2.9 prior, multifamily starts slipped -3.1% after coming in flat in February. Overall permits fell -2.4% following February’s +7.3% surge. Industrial Production (MoM) grew +0.7% vs. +0.6% prior and Capacity Utilization posted 79.2% vs. 78.8% prior. Treasuries are rallying off session lows following the disappointing housing starts and building permits, and daily momentum is still bullish. The curve has bear steepened with 2s10s up 3 bps.
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