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Jon Allen

Morning Commentary on Financial Markets 11-21-2012

Monday, April 16, 2012 - Article by: Jon Allen - Lyons Mortgage Services, Inc. - Message

The 10 Year Treasury Yield rose to 1.64% this morning, meaning higher mortgage rates than yesterday, due to U.S. housing reports below:

- October Housing Starts (New Residential Construction) rose to a 894K Annuallized Rate, which is a 3.6% increase from the previous month (863K Annuallized Rate). This increase in housing starts beat market expectations (840K) and is now at a four year high. This main reason for this jump in housing starts is due to an expected increase in demand by most potential homebuyers due to higher home affordability because of record low mortgage rates.

- October Building Permits (Future Residential Construction) dropped to a 866K Annuallized Rate which is a 2.7% decrease from the previous month (890K Annuallized Rate). This decrease in housing starts came in worse than market expectations (870K). However, single family house buliding permits rose to its highest level since the middle of 2008, which is another good sign for the housing market (a drop in building permits for multifamily units is what mainly caused this decrease in overall building permits).

- In France, Moodys Rating Agency downgraded France's sovereign debt rating from 'AAA' to 'AA' due to weakness in the French economy because of its high levels of public spending (56% of GDP - one of highest levels in the world) and its exposure to the Eurozone crisis. This downgrade was widely expected as S&P Rating Agency also downgraded France's sovereign debt to an 'AA' rating earlier this year.

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