Rally in Stocks Eases, Treasurys Inch Higher After Positive Housing Data, Crude Buildup

Housing Data Beats Expectations  With median forecasts calling for a 1.8% MoM decline, existing home sales for November impressed with a 0.7% rise to an annualized rate of 5.61 million units.  The sales figures match the highest reading since February 2007, as home buyers have become increasingly eager to lock in lower mortgage rates with the prospect of increased borrowing costs heading into the new Trump administration era.  According to data from Freddie Mac, the fixed 30-year mortgage rate has increased roughly 60 bps since the election in November and now averages 4.16%, a level last seen in October 2014.  Overall, existing homes sales are up 15.4% from one year ago with purchases in the Northeast and South regions contributing the largest shares.

Oil Slips with Inventory Build
The price of crude oil traded down 1.50% throughout today’s session after a weekly report by the Energy Information Administration showed a surprise build in US crude inventories that represented the first increase in five weeks.  Crude stockpiles rose by 2.3 million barrels in the week ending December 16th where analysts had projected a 2.5-million-barrel drawdown.  Also released in the EIA report, gasoline and distillate fuel inventories fell despite increased output, as total fuel demand jumped to its highest level since 2007.  A barrel of WTI crude oil is currently priced at $52.50, and Brent crude is trading near $54.50/barrel. 

With trading volumes thinning as the holiday weekend approaches, both equity and bond markets were relatively calm throughout the course of the trading session.  All three major stock indices closed marginally lower (0.15% – 0.25%) on the day, while Treasury yields/swap rates were down 1-2 bps across the curve as the yield on the 10-year Treasury note hovered around 2.54%.  Tomorrow, investors will gain further insight into the health of the US economy with the release of Q3 GDP, durable goods orders, and personal income/spending data.