THE BASIS POINT

Private Residential Spending Up, ISM Manufacturing Contracts

Mortgage bonds (MBS) were selling this morning (FNMA 30yr 3% coupon -14 basis points early on), then recovered in the last hour (FNMA 3% now -3 basis points). Still, rates are up very slightly to begin the week. Below is today’s U.S. data, and here’s the early-December rate outlook.

Construction Spending (October 2012)
– Construction Spending – Month/Month +1.4%.  Previous was +0.6%. 

– Private residential spending was +3.0%.

– The expanding population requires about 1.5 million Housing Starts per year and we have been well below that for years. There should be underlying demand for housing.

ISM Manufacturing Index (November 2012)
– ISM Manufacturing Index was 49.5 indicating mild contraction. Previous was 51.7.

– 50 is dividing line between expansion and contraction.

– Here is a summary table and comments from ISM survey respondents

PMI Manufacturing Index from Markit Economics (November 2012)
– Level was 52.8 up from the previous 51.0.

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