Bond Market Update

Data Recon

• Housing starts increased 19.0% month-over-month in June to a seasonally adjusted annual rate of 1.427 million units (Briefing.com consensus: 1.328 million), paced by a 76% increase in multi-unit starts. Building permits--a leading indicator--declined 3.0% month-over-month to a seasonally adjusted annual rate of 1.367 million (Briefing.com consensus: 1.403 million), with single-unit permits down 2.4%.
  • The key takeaway from the report is that there wasn't any growth in single-unit starts or permits, which isn't a positive read for a housing market pinched by affordability issues.
• Separately, import prices were up 0.3% month-over-month in June and up 7.1% year-over-year. Excluding fuel, they were up 0.4% month-over-month and up 4.2% year-over-year. Export prices fell 0.6% month-over-month but were up 10.2% year-over-year. Excluding agricultural products, export prices were down 0.7% month-over-month and were up 10.6% year-over-year.
  • The key takeaway is that the outsized year-over-year increases for import and export prices goes to show that there is ample inflation still to contend with here and abroad.
• Yield Check:
  • 2-yr: -2 bps to 4.14%
  • 3-yr: -1 bp to 4.19%
  • 5-yr: -2 bps to 4.26%
  • 10-yr: -3 bps to 4.54%
  • 30-yr: -4 bps to 5.06%