The MBA mortgage applications index in the week of March 29th was very strong mostly because of the growth in refinancing due to the drop in interest rates. The composite index increased 18.6% on top 8.9% growth in the prior week. Weekly purchase index growth was 3% on top of 6% growth. The spring selling season is in solid shape. The purchase index is near its cycle high. The refinance index increased 39% on top of 12% growth. As you can see from the bottom chart below, the 5 month decline in 30 year interest rates was the largest since 2010. (Rates increased 2 basis points in the week of April 4th to 4.08%.)
— George Pearkes (@pearkes) April 3, 2019
Worst Economic Surprises Since Financial Crisis
As the chart below shows, the latest economic reports out of America, emerging markets, and the G10 nations have been missing estimates.
The Global Economy is Slowing! This chart shows the Citi Data Change Indices for emerging markets (orange), the U.S. (blue) and the G10 (green). These series, which measure economic data versus one-year averages, are currently at their lowest levels of the post-crisis period. pic.twitter.com/jDAz13REdl
— Bianco Research (@biancoresearch) April 3, 2019
The surprise indexes for the G10 and U.S. are at post-recession lows. Missing estimates by the most since the financial crisis isn’t the same as growth being the slowest since then, but it’s far from a positive. The good news to counter such a bad reading is the global services PMI increased from 53.3 to 53.7 in March which was the best reading since last November. It’s not 100% clear if the global slowdown expanded from manufacturing to services. Markit’s reports don’t indicate it has.