BMO analyst Aaron Kohli said..........>

US DATA REACT: BMO analyst Aaron Kohli said today's July New Home Sales

"disappointed with the level coming in at 571k versus 610k consensus though the

+20k upward revision to June took some of the sting out of the still

disappointing number. Month over month, that translated to a -9.4% drop while

the market was looking for a flat read. We're more focused on the Existing Home

Sales number tomorrow for a better read on the market as it is much larger and

less volatile than New Homes. The supply of new homes rose slightly as well to

5.8 though that was off a very low 5.2 level. The miss has added a slight bid to

the Treasury market and arrested the selloff that was underway."

- He adds one reason for BMO's "outsized focus on housing" is that "amount of

weight it carries in CPI with shelter making up nearly 34% of an average

consumption basket according to the BLS" so "we're watching for any sign of

weakness in shelter costs which have been responsible for holding up CPI in the

last few months even as other elements weakened. The larger mover today is still

the shutdown headlines and we're watching 2.155% as the next stop if 2.18%

breaks on a subsequent test in 10-year yields."