Archive for January 26th, 2011

FOMC Statement – January 26, 2011

New: Formulation that despite rise in commodity prices longer-term inflation expectations have remained stable and; Since Mr. Hoenig in no longer a voting member all FOMC members voted in favor of FOMC monetary policy action.

U.S. New Home Sales Rose 17.5% In December

U.S. new home sales rose 17.5% to 329.000 SAAR; Consensus was at 300.000 SAAR, prior reading (revised downward 10.000) was at 280.000 SAAR.

Month of supplies fell from 8.4 down to 6.9 months. Backlog of unsold new homes is at 191.000, lowest since February 1968.

As I wrote yesterday, months of supply is still above pre-crisis levels, but the absolute level of unsold new homes is so low that small pickup in new home sales could lead to demand outweighing supply.

If inflow of foreclosed homes to the market does not increase dramatically the possibility of further large-scale decreases of home prices is not high. I will monitor situation closely as home prices are crucial for financial sector health.

Morning Reading – January 26, 2011 – Updated

*** The Slope Of Hope: Time Saver ***
*** The Slope Of Hope: Food Inflation- More Than Meets the Eye ***
*** Daily Options Report: Fading VIX Breakouts ***
*** FT Alphaville: A very messy Ambac lawsuit for JPMorgan ***
*** FT Alphaville: Searching for BoE credibility on inflation ***
*** FT Alphaville: WTI’s upcoming ‘Keystone’ problem ***
*** Self-Evident: Far from the madding crowd ***
*** Pragmatic Capitalism: IS QE ACTUALLY WORKING? ***

MBA Mortgage Applications Down 12.9%

MBA mortgage applications fell 12.9%; Prior reading was an increase of 5.0%; On year level MBA Basic Index is down 13.9%.


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