Bond Market Update

Data Recon

• Initial jobless claims for the week ending May 16 decreased by 3,000 to 209,000 (Briefing.com consensus: 210,000), while continuing jobless claims for the week ending May 9 were unchanged from the prior week at 1.782 million.
  • The key takeaway from the report is that there is nothing to see here, meaning there is nothing in these latest numbers that would suggest there has been a sea change in a labor market environment that remains characterized by low firing and low hiring activity.
• Housing starts decreased 2.8% month-over-month in April to a seasonally adjusted annual rate of 1.465 million units (Briefing.com consensus: 1.420 million). Building permits rose 5.8% month-over-month to a seasonally adjusted annual rate of 1.442 million (Briefing.com consensus: 1.380 million).
  • The key takeaway from the report is that there was broad-based weakness across all regions for both single-family starts and single-family building permits, underscoring the headwind posed for builders by rising costs for financing, materials, and labor.
• The Philadelphia Fed Index fell from 26.7 in April to -0.4 in May (Briefing.com consensus: 15.5). The dividing line between expansion and contraction for this survey is 0.0, so the May result reflects a slight contraction in activity versus April.
  • The key takeaway from the report, though, is that the diffusion index for future general activity climbed 12 points to 53.2, which is the highest reading since June 2021 and a sign that manufacturers are expecting better activity to follow in the next six months.
• Yield Check:
  • 2-yr: +7 bps to 4.11%
  • 3-yr: +6 bps to 4.17%
  • 5-yr: +6 bps to 4.29%
  • 10-yr: +5 bps to 4.62%
  • 30-yr: +2 bps to 5.14%