Housing starts, PPI, industrial production, and the FOMC minutes….Small 05/15/2021 – 11/15/2027 POMO for $1.5-$2.5 billion.
The Mortgage Bankers Association’s index of mortgage applications fell 9.5% as indexes for both refinancing and purchase loans gave ground (-11.4% and -5.9%, respectively).
8:30: Housing starts and permits for Jan…opposite moves? The story this month starts with permits, which surged in December in advance of new building codes in several states. Although we do not forecast permits on a regular basis, the forecasts of significant declines offered by others look quite sensible to us. The expectation of an increase in starts results in part from the prior surge in permits and is not a view we hold with a great deal of confidence. It certainly does not represent a fundamental change in an industry saddled with excess supply.
On starts, median forecast (of 76) +1.9%, ranging from -10.2% to +11.5%; last -4.3%.
On permits, median forecast (of 56) -10.9%, ranging from -24.2% to -2.7%; last +16.7%.
8:30: Producer price index for Jan…energy and food drive the headline up again. Rising prices of both gasoline and food point to another surge in the headline index. The core index should be more muted, though up more than its CPI cousin, as goods prices reflect the surge in commodity prices more than those of services.
On headline, median forecast (of 74): +0.8%, ranging from +0.3% to +1.4%; last +1.1%.
On core, median forecast (of 71): +0.2%, ranging from +0.1% to +0.4%, last +0.2%.
9:15: Industrial production and capacity utilization for Jan…a decent gain? Although payroll gains in January were disappointing overall, the manufacturing sector managed to add 49,000 jobs. This plus an uptick in the workweek in that sector suggests another decent increase in industrial output, despite the poor weather.
On production, median forecast (of 80): +0.5%, ranging from -0.5% to +0.9%; last +0.8%.
On capacity utilization, median forecast (of 66): 76.3%, ranging from 75.4% to 78.0%; last 76.0%.
14:00: Minutes to the Jan 25-26 FOMC meeting…not as boring as the statement. Although the meeting itself did not produce any material surprises, the financial markets will nonetheless read these minutes carefully. As discussed in yesterday’s comment, the committee probably marked up its forecast for near-term growth. We’ll also be interested in whether more members feel that the longer-run sustainable level of unemployment has moved up and in any color on the range of views about future policy.
Via GS Data