MBS up 9 bps. Stocks flat.

The construction data this morning is almost never a relevant market mover for bonds and today’s installment isn’t much of an exception. There was a slight amount of additional weakness at 8:30am, but no corresponding volume blip to suggest the data was the driver.

Housing Starts= 1.42m vs 1.40m f’cast [1.432m prev]

Building Permits= 1.413m vs 1.45m f’cast [1.55m prev]

Some comments from Fed’s Bullard are adding to the weakness now:

EXCLUSIVE-FED’S BULLARD: NOT MUCH CLEAR PROGRESS ON INFLATION MEANS INTEREST RATES NEED TO CONTINUE TO RISE – REUTERS INTERVIEW

BULLARD STILL SEES ADEQUATELY RESTRICTIVE POLICY RATE AT 5.50%-5.75% RANGE, BIAS TO HOLD FOR LONGER UNTIL INFLATION CONTAINED

With the Fed Funds Rate currently at 4.75-5.0, that’s THREE more 25bp hikes (very different from the market’s expectation for ONE additional hike).

The reaction has been almost imperceptible, largely because this is not a new idea among many of the FOMC members.

Median rent fell 0.4% Y-o-Y in March to $1,937, the first decline since 3/20. Rents are 19.9% higher than they were in 3/20. The biggest decline was in Austin, where rents fell 11% to $2,104, followed by Chicago where they fell 9% to $2,206. Rents rose the most in Raleigh, up 17% to $2,080, followed by Cleveland where they rose 15% to $1,530. NY’s median rent is tops at $4,022.

Despite the good CPI numbers, the Fed Funds futures are solidly predicting a 25 basis point hike in May.

Housing starts fell 0.8% MOM and 17% YOY to a seasonally adjusted annual rate of 1.42 million. Building permits fell 8.8% MOM and 24.8% YOY to 1.41 million. Single family starts rose while multi-family fell.

Multi-family completions came in at 484k. While housing starts overall have been tepid, multi-family completions has been hovering around 35 year highs. With additional apartment supply coming onto the market, we should see a better balance of housing supply and demand.

The Federal Trade Commission (FTC) filed a motion in federal court requesting the court issue a temporary restraining order and preliminary injunction to prevent Intercontinental Exchange from going through with its proposed acquisition of rival mortgage technology firm Black Knight, pending the outcome of the FTC’s administrative challenge to the deal.