Bond Market Update

Data Recon

• Housing starts declined 5.5% month-over-month in May to a seasonally adjusted annual rate of 1.277 million (Briefing.com consensus 1.385 million) with single-unit starts down 5.2%. That is the lowest rate since June 2020. Building permits -- a leading indicator -- declined 3.8% month-over-month to 1.386 million (Briefing.com consensus 1.455 million) with single-unit permits down 2.9%. That is the lowest rate since June 2020.
  • The key takeaway from the report is that it suggests the housing market will remain subject to inventory constraints that will create affordability pressures, barring a stronger pickup in listings of existing homes for sale that has been tough to come by with mortgage rates remaining high.
• Initial jobless claims for the week ending June 15 decreased by 5,000 to 238,000 (Briefing.com consensus 237,000. Continuing jobless claims for the week ending June 8 increased by 15,000 to 1.828 million.
  • The key takeaway from the report is that jobless claims have moved up a notch from lower levels to connote some softening in the labor market.
• The June Philadelphia Fed Index decreased to 1.3 (Briefing.com consensus 6.5) from 4.5 in May. A reading above 0.0 is indicative of expansion, but the lower reading versus May reflects a deceleration in the pace of expansion.
  • The key takeaway from the report is that the indexes for new orders, shipments, and employment all remained negative while the prices paid component increased from 18.7 to 22.5.
• The Q1 Current Account Balance widened to -$237.6 billion (Briefing.com consensus -$203.0 billion) from a downwardly revised $221.8 billion (from -$194.8 billion).
  • The key takeaway from the report is that the widening in the deficit mostly reflected an expanded deficit on goods.
• Yield Check:
  • 2-yr: +4 bps to 4.74%
  • 3-yr: +4 bps to 4.47%
  • 5-yr: +5 bps to 4.29%
  • 10-yr: +6 bps to 4.27%
  • 30-yr: +6 bps to 4.41%