Bond Market Update
Updated: 16-Aug-24 15:24 ET
Treasury Market Summary
Modest Gains
- U.S. Treasuries recouped a portion of Thursday's losses in some seesaw trading action, aided a bit by some defensive posturing in the face of the yen showing renewed strength against the dollar. The euro was also strong today versus the greenback. Lower oil prices and a weak housing starts and building permits report for July were added factors underpinning today's modest gains across the curve. The U.S. Dollar Index declined 0.5% to 102.49.
- Yield Check:
- 2-yr: -4 bps to 4.06%
- 3-yr: -4 bps to 3.87%
- 5-yr: -3 bps to 3.77%
- 10-yr: -4 bps to 3.89%
- 30-yr: -3 bps to 4.15%
- News:
- Vice President Kamala Harris leads former President Trump by 1 point in average of latest polls, which is within the margin of error. Ms. Harris led by 1 point last week, according to RealClear Politics
- Vice President Kamala Harris will call for construction of three million housing units and tax incentives for first time buyers, according to The Wall Street Journal
- Reserve Bank of Australia Governor Bullock poured cold water on the idea of a near-term rate cut
- PBOC Governor Pan said China will gradually shift away from quantitative targets and place a greater emphasis on the use of price-based tools like interest rates, according to Xinhua
- Japan's foreign investment in Japanese stocks JPY521.9B (last -JPY643.7B)
- U.K.'s July Retail Sales 0.5% m/m (expected 0.6%; last -0.9%) and 1.4% yr/yr (expected 1.4%; last -0.3%)
- Today's Data:
- Total housing starts declined 6.8% month-over-month to a seasonally adjusted annual rate of 1.238 million units (Briefing.com consensus 1.350 million), with single-unit starts down 14.1% to 851,000. Building permits were down 4.0% month-over-month to a seasonally adjusted annual rate of 1.396 million (Briefing.com consensus 1.440 million), with single-unit permits down 0.1%.
- There is some chatter that Hurricane Beryl had some influence over the disappointing data, yet that isn't a totally adequate excuse given the decline in single-unit starts and permits in the West where Hurricane Beryl had zero impact. The key takeaway, then, is that conditions in the residential construction market remain soft with higher rates acting as a constraint.
- The preliminary Index of Consumer Sentiment for August increased to 67.8 (Briefing.com consensus 66.7) from the final reading of 66.4 for July. In the same period a year ago, the index stood at 69.4.
- The key takeaway from the report is that sentiment in August was swayed by political developments, yet the take-home point is that inflation is still the top concern among consumers.
- Total housing starts declined 6.8% month-over-month to a seasonally adjusted annual rate of 1.238 million units (Briefing.com consensus 1.350 million), with single-unit starts down 14.1% to 851,000. Building permits were down 4.0% month-over-month to a seasonally adjusted annual rate of 1.396 million (Briefing.com consensus 1.440 million), with single-unit permits down 0.1%.
- Commodities:
- WTI crude: -3.4% to $75.53/bbl
- Gold: +1.8% to $2537.40/ozt
- Copper: 0.0% to $4.15/lb
- Currencies:
- EUR/USD: +0.5% to 1.1020
- GBP/USD: +0.7% to 1.2942
- USD/CNH: -0.2% to 7.1647
- USD/JPY: -1.1% to 147.64
- The Week Ahead:
- Monday: July Leading Indicators
- Tuesday: Nothing of Note
- Wednesday: MBA Mortgage Applications Index; EIA Crude Oil Inventories; 20-Year Bond Auction; FOMC Minutes
- Thursday: Weekly Initial and Continuing Jobless Claims; Preliminary August S&P Global US Manufacturing PMI and US Services PMI; July Existing Home Sales; EIA Natural Gas Inventories
- Friday: July New Home Sales; Fed Chair Powell Speech at Jackson Hole Symposium
