Bond Market Update

Data Recon

• Housing starts increased 10.8% month-over-month in March to a seasonally adjusted annual rate of 1.502 million units. Building permits, meanwhile, declined 10.8% month-over-month in March to a seasonally adjusted annual rate of 1.372 million units.
  • The key takeaway from the report is that there was broad-based strength in starts by region but also broad-based weakness in permits by region. The latter is the better indicator for the impact of the Iran war and the uncertainty it has created because permits are a leading indicator.
• Durable goods orders increased 0.8% month-over-month in March (Briefing.com consensus: 0.5%) following an upwardly revised 1.2% decline (from -1.4%) in February. Excluding transportation, orders were up 0.9% month-over-month (Briefing.com consensus: 0.6%) following an upwardly revised 1.2% increase (from 0.8%) in February.
  • The key takeaway from the report is that there was a big jump (+3.3%) in new orders for nondefense capital goods excluding aircraft. This is a proxy for business spending, and it is believed to reflect in part the pickup in capital expenditures for AI initiatives.
• The Advance Intl. Trade in Goods deficit was $87.9 billion in March versus $83.5 billion in February.
• Advance Wholesale Inventories were up 1.4% following a 0.9% increase in February.
• Advance Retail Inventories jumped 0.7% in March following a 0.3% increase in February.
  • The key takeaway from the report is that the uptick in inventories should provide a boost to Q1 GDP.
• Yield Check:
  • 2-yr: +3 bps to 3.87%
  • 3-yr: +2 bps to 3.89%
  • 5-yr: +3 bps to 4.01%
  • 10-yr: +2 bps to 4.37%
  • 30-yr: +1 bp to 4.95%