More Positive News for the Journey to Market Balance
MarketWatch reports today that yields (interest rates) on both 10-Year Treasury notes ($TNX : CBOE 10-Year Treasury Yield Index); and 30-Year Long Bonds ($TYX : CBOE 30-Year Treasury Yield Index) are continuing in a downward trend. MarketWatch analysts suggest that news of homebuilders sharp pull-back on new housing starts is a primary catalyst.
This is actually good news for the real estate market (although not the homebuilder Stock Market). Interest rates are trending toward increased affordability for buyers (helping sustain curent demand) and the homebuilders' reduction in new housing starts (inventory reduction) will further aid in achieving market balance on the supply side. It's a "win-win" for the market, but not for homebuilders. Producer Price Index (PPI) also fell 0.6% in January and Core PPI rose only 0.2% which were in line with market expectations. Fed Chairman Brenanke also told Congress on Wednesday (Feb 14) that he was "upbeat about ongoing economic growth, and sees tentative signs of stabilization in the housing sector." Continuing positive signs as we head into the Fed's FOMC "interest rate-setting" meeting in March.