We finished out another week of some important economic data with two of the high points being New Home Sales for February, as well as the February Durable Goods Orders. Looking at housing market data, February New Home Sales were much stronger than expected, up 6.1% month over month. Warm weather was most likely the reason for the larger rise in sales as all regions were up across the country with the exception of the Northeast. Looking at the builder sentiment for March, this number was also very strong, posting a 71 print which is the best in over a decade. Switching over to Durable Goods Orders, we saw a rise of 1.7% last month, beating out market expectations of a 1.4% increase. The headline number was primarily driven by a 48% increase in non-defense aircraft orders from Boeing. When we pull out aircraft numbers from the equation, the data for February is a little more mixed with spots of strength and weakness. As for capital goods orders excluding defense and air, a leading indicator for business investment in equipment, they disappointingly fell by .1%. Shipments of those items, however, rose a strong 1% month over month. This points to better business investment in the past, but a weaker outlook going forward.
Despite the important housing data and durable goods report, the markets continue to be solely focused on the healthcare vote that President Trump is pushing for. After Thursday’s setback with conservative Republicans saying they would not support the legislation, hence a delayed vote, Trump is now putting the House’s feet to the fire. That said, markets are waiting eagerly to see the results and if this legislation can pass. In our view, any failed vote would hurt stocks and show a little more support for the bond market and interest rates.
Looking at the technical levels on the 10yr, we are still trading within our micro-range of 2.39-2.47%, waiting for another breakout. We’ve had a nice push lower in rates this week and our bias is still to take advantage of current levels until a break of our recent range is made.