Mixed Housing Data Displays 18-Month Low While Oil Surges on Stockpile Drawdown

US economic data released today revealed mixed housing data and unexpectedly low levels of crude stockpiles.  New housing starts in September reported a nine percent drop to an annualized rate of 1.047 million units, the lowest level since March 2015.  While the groundbreaking on single-family homes jumped 8.1 percent, multi-family housing starts weighed down the overall activity with a substantial 38% decline.  The extreme drop in multi-family starts yielded a 264,000 annual pace, the lowest reading since June 2013, and has been widely deemed an outlier by market experts.

On the positive side, building permits in September foreshadow a likely rebound for future multi-family construction, reporting a 16.8% increase in the month.  Overall building permits rose 6.3% for the month, signaling future growth in housing units that could help ease housing rents and purchase prices as inventories build back up.

Crude oil prices surged to 15-month highs after US stockpiles unexpectedly dropped last week.  The Energy Information Administration reported a weekly decrease of 5.2 million barrels compared to median forecasts of a 2.75-million-barrel rise.  WTI crude oil gained as much as 3.3% on the day, touching over $52/barrel.

Abroad, Asian markets closed higher following GDP data from China that was reported in-line with the growth expectations set by the government.  Chinese gross domestic product expanded 6.7% in the last quarter compared to a year earlier, falling within the full year 6.5% to 7% target range, as retail sales led the way with a 10.7% jump.  With GDP expected to keep pace for the remainder of 2016, current goals for China’s government take aim at reducing excessive corporate debt and curtailing the surge in property prices.

With the third and final presidential debate set for tonight, all three major U.S. stock indexes are currently posting marginal gains between 0% – 0.5%, while Treasury yields/swap rates are flat to up 2 bps across the curve.  The oil rally is closing the day with WTI crude up over 2.3% to $51.50/barrel and Brent crude rising 1.75% to $52.60/barrel.