This morning's data on the housing sector tells us we have not yet reached the end of the "housing bust". Housing Starts for April fell 10.6% while analysts had forecast a gain of 3.6%. Hosing Permits fell 4.0%, ignoring the expectation that had veen for a gain of 0.9%.
Industrial Production was uncahnged in April after having increased 0.7% in March, and capacity utilization edged down 0.1% to 76.9%. This rate is 3.50% lower than the average from 1972 to 2010. This data may seem mundane, however, it reflects considerable excess capacity in the manufacturing sector. Or stated in another way, fewer manufacturing jobs available.
U.S. stock and bond markets are reacting to the day's weak economic reports as one would expect. Stocks are trading lower while bond prices are rising; recall that inverse relationship that as bond prices rise, interest rates decline. The yield on the 10 year note has fallen from 3.16% at the close on Monday to its current level of 3.10%.
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