The minutes indicate that the Fed's take on housing is the same as what has
been implied by the Fed's public remarks, and the minutes help clear up some
of the confusion created when the Fed added new emphasis on the housing
market's weakness with the use of the word "substantial" in describing the
housing market's slowdown. There were a few passages that indicate a more
moderate view of the housing market's weakness than implied by the original
statement:
"The ongoing adjustment of the housing market was likely to damp economic
growth in the near term, but this effect was expected to dissipate.
"In their discussion of the major sectors of the economy, participants noted
that developments in the housing market continued to weigh heavily on
economic activity. Housing starts and permits for new construction had
dropped sharply in October, and contacts in the building sector reported
that construction firms were continuing to cancel options on land purchases.
However, there were some indications that home sales might be starting to
stabilize. ...
"Thus far, the adjustment of activity and prices in the housing market did
not appear to have spilled over significantly to consumer spending. ..."
Tony Crescenzi Blog ISM Beats ADP in Bond Market 1/3/2007 12:42 PM EST But a debate continues over whether housing and auto weakness will let up or bleed into other sectors.
Tony Crescenzi Blog Rate-Cut Odds Rise 1/3/2007 12:02 PM EST Although it's not until the May FOMC meeting that the cut likelihood increases.
Tony Crescenzi Blog ADP Data Lower Jobs Forecasts 1/3/2007 9:26 AM EST If ADP's forecast is accurate, its monthly payroll forecast will grow increasingly important.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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