Bond Market Update

Data Recon

• Total housing starts declined 11.4% month-over-month in March to a seasonally adjusted annual rate of 1.324 million (Briefing.com consensus 1.418 million) from a downwardly revised 1.494 million (from 1.501 million) in February. Building permits increased 1.6% month-over-month to a seasonally adjusted annual rate of 1.481 million (Briefing.com consensus 1.455 million) from an upwardly revised 1.459 million (from 1.456 million) in February.
  • The key takeaway from the report is that single-unit starts (-14.2%) and permits (-2.0%) were both down during the month, as affordability constraints driven by higher mortgage rates and building costs presumably curtailed homebuilder activity.
• Initial jobless claims for the week ending April 12 decreased by 9,000 to 215,000 (Briefing.com consensus 225,000). Continuing jobless claims for the week ending April 5 increased by 41,000 to 1.885 million.
  • The key takeaway from the report is that the low level of initial jobless claims will support the idea that the labor market is still in a solid position overall. Additionally, this should factor well in forecasts for April nonfarm payrolls since it covers the period in which the employment survey is conducted.
• The April Philadelphia Fed Index plunged to -26.5 (Briefing.com consensus 10.0) from 12.5 in March. The dividing line between expansion and contraction is 0.0.
  • The key takeaway from the report is that the index for new orders dropped sharply to -34.2 from 8.7, signaling a notable dropoff in demand; meanwhile, the prices paid index rose to 51.0 from 48.3.
• Yield Check:
  • 2-yr: -1 bp to 3.78%
  • 3-yr: -1 bp to 3.78%
  • 5-yr: +1 bp to 3.92%
  • 10-yr: +1 bp to 4.29%
  • 30-yr: +1 bp to 4.75%