UMBS down 8 bps on the open. Bonds began the overnight session in stronger territory as overseas buyers dogpiled on Wednesday’s strong move. Gradual weakness set in after that.

Jobless Claims * 190k vs 214k f’cast, 205k prev

Continuing Claims increased 17k to 1.65m.

Philly Fed Biz Index

* -8.9 vs -11.0 f’cast, -13.7 prev

* Prices 24.5 vs 36.3 prev

* Jobs 10.9 vs -0.9 prev

* 6-mo outlook 4.9 vs -0.9 prev

Housing starts fell 1.9% MOM and 21.8% YOY to an annualized rate of 1.38 million. This was a touch above expectations. Building Permits fell 1.6% MOM and 29.9% YOY. This is not surprising given how lousy the home purchase market is. KB Home announced that their cancellation rate was so large, they were halting new projects and just working on the backlog.

NAHB Home Builder Survey increased 4 points from 31 to 35. Both present and future ratings increased. Traffic increased 3 – though very low at 23