New construction of US residential housing in February was considerably weaker than expected, raising more doubts about the resilience of the economy’s strength. Analysts were looking for a mild pullback to a seasonally adjusted annual rate of 1.048 million units for last month. As it turns out, that was far too optimistic. The Census Bureau reports that housing starts slumped 17% last month to an annual pace of 897,000, the lowest in more than a year. Is the weakness a danger sign for the macro trend? Or is it just a blip due to a rough winter that’s temporarily weighing on economic activity? No one really knows at this stage, although that doesn’t stop anyone from choosing a narrative that fits their economic worldview.
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The Federal Reserve’s two-day meeting begins today, ending with tomorrow’s announcement that will be widely analyzed for signals on the expected timing of the first interest rate hike since 2006. Some analysts have recently predicted the first hike could come as early as June, but the wobbly economic data of late suggests that the Fed may be inclined to delay the start of a tighter monetary policy. The market once again seems to be embracing the lower-for-longer view, based on the latest run into bonds. After Treasury yields reached 2015 highs earlier this month, rates have pulled back in recent days ahead of tomorrow’s Fed announcement.
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● Weak US factory data suggest softer economic growth | Reuters
● US Homebuilder Confidence Drops To Eight-Month Low In March | RTT
● Timing of Fed Rate Move Remains Clouded | WSJ
● Empire State Manufacturing Activity Growth Unexpectedly Slows in Mar | Fox
● US oil prices under pressure after hitting six-year low | MarketWatch