Bond Market Update

Data Recon

• New home sales declined 17.6% month-over-month in January to a seasonally adjusted annual rate of 587,000 (Briefing.com consensus: 719,000), significantly undershooting expectations. On a year-over-year basis, new home sales were down 11.3%.
  • The key takeaway from the report is that sharp declines were registered in all regions, despite declines in both median and average selling prices, which suggests some demand attrition in the face of elevated mortgage rates and perhaps burgeoning concerns about job security.
• January Wholesale Inventories declined 0.5% month-over-month (Briefing.com consensus: 0.2%) following a downwardly revised 0.1% decline (from 0.2%) in December.
• The January Leading Economic Index was down 0.1% following a 0.2% decline in December.
• Treasury yields have been retreating from earlier peaks. The 10-yr note yield hit 4.32% but was met with solid resistance there and is now back at 4.26%. Most of the move to 4.26% came before the weak New Home Sales report.
• Yield check:
  • 2-yr: +6 bps to 3.81%
  • 3-yr: +6 bps to 3.81%
  • 5-yr: +3 bps to 3.86%
  • 10-yr: unch at 4.26%
  • 30-yr: -3 bps to 4.85%