U.S. Treasuries ended the holiday-shortened week on a firmly lower note with shorter tenors leading the selling which reversed a good portion of this week’s gains. The bond market compressed the 2s10s spread by six basis points to -82 bps. The 2-yr note yield fell five basis points to 4.51% and the 10-yr note yield fell 11 basis points to 3.69%. Uncertainty about the debt ceiling finally eased after a deal was passed by both chambers of Congress. The catalyst … Continue reading “Bond Traders Weekly Outlook: Shorter Tenors Lead the Selling Ahead of Fed”
Bond Traders Weekly Outlook: Two Year Rates Jump in U.S., U.K and E.U on Inflation Fears
U.S. Treasuries ended the week lower as yields on short-term government debt in the US, UK and eurozone have begun to rise again anticipating more prolonged rate increases to contend with price rises. Rate hike expectations continued growing with the fed funds futures market now showing a 66.5% implied likelihood of another 25-bps increase in June, up from 17.4% a week ago. In the U.K. two-year gilts had one of the biggest weekly falls in 20 years. The entire Treasury … Continue reading “Bond Traders Weekly Outlook: Two Year Rates Jump in U.S., U.K and E.U on Inflation Fears”
US Mortgage Applications Fall 4.6% With Mortage Rates Highest Since March
The Mortgage Bankers Association showed mortgage applications in the US in the third week of May slumping 4.6%. The 30-year fixed rate increased to 6.69 percent, the highest level since March. The Refinance Index decreased 5 percent from the previous week and was 44 percent lower than the same week one year ago. Homeowners still have reduced incentive as borrowers face an ongoing affordability challenge and a low inventory problem. Mortgage Bankers Association for the week ending May 19, 2023. “Since rates … Continue reading “US Mortgage Applications Fall 4.6% With Mortage Rates Highest Since March”
Bond Traders Weekly Outlook: Two Year Note Compresses 2s10s Spread Further
U.S. Treasuries ended the week mixed with the sixth consecutive loss for the 5-yr note through to longer tenors. Treasury yields moving lower in response to debt ceiling and regional bank worries. This week’s fall was paced by shorter tenors keeping the yield curve under pressure, compressing the 2s10s spread by six basis points for the second consecutive week, to -58 bps. The US 2-year yield rose 29 basis points on the week trading at 4.27%. The high yield reached … Continue reading “Bond Traders Weekly Outlook: Two Year Note Compresses 2s10s Spread Further”
US Housing Starts Rose 2.2% in April While Building Permits Fell 1.5%
US housing starts in April increased 2.2% month-over-month in April to a seasonally adjusted annual rate of 1.401 million (consensus 1.405 million) from a downwardly revised 1.371 million (from 1.420 million) in March. Single-family starts were up 1.6% month-over-month, because of a strong 59.5% increase in the West; single-family starts declined in all other regions. Building permits declined 1.5% month-over-month to 1.416 million consensus 1.438 million) from an upwardly revised 1.437 million (from 1.413 million) in March. Affordability is the … Continue reading “US Housing Starts Rose 2.2% in April While Building Permits Fell 1.5%”
Bond Traders Weekly Outlook: Two Year Note Underperforms After Stellar Treasury Auction Week
U.S. Treasuries ended the week lower, giving back their gains from earlier in the week. Friday’s retreat left yields on 10s and 30s little changed for the week while the 2-yr note underperformed. The 2-yr Treasury note yield rose seven basis points to 3.98% this week and the 10-yr note yield rose one basis point to 3.46%. The 2s10s spread compressed by six basis points to -52 bps. The U.S. Treasuries auction were all strong this week. A $21 billion … Continue reading “Bond Traders Weekly Outlook: Two Year Note Underperforms After Stellar Treasury Auction Week”
US Mortgage Applications Jump 6.3% With Refinancing Applications Surging 10%
The Mortgage Bankers Association showed mortgage applications in the US in the first week of May jumped 6.3%. Applications to refinance a home loan surged 10% and those applying to buy a home rose 4.8%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) dropped by 2bps to 6.48%, the lowest in three weeks, still homeowners still have reduced incentive as borrowers face an ongoing affordability challenge and a low inventory problem. Mortgage Bankers Association … Continue reading “US Mortgage Applications Jump 6.3% With Refinancing Applications Surging 10% “
Bond Traders Weekly Outlook: Bond Markets Moving with Chaotic Trepidation
Bond markets have moved with chaotic trepidation. The three-month/two-year Treasury yield spread inverted a further 25 bps this week to negative 132 bps (most inverted in four decades). Bond traders have the overhang that the U.S. Treasury market since 2008 has been conditioned to discount the possibility of aggressive rate cuts and QE-related Treasury/MBS purchases. Not a healthy scene, given the more manic markets get with bank lending excess the greater the probability of another bout of aggressive monetary stimulus. … Continue reading “Bond Traders Weekly Outlook: Bond Markets Moving with Chaotic Trepidation”
Bond Traders Weekly Outlook: Treasuries Closed Out April Solidly Across the Curve
U.S. Treasuries closed out April with solid gains across the curve. Gains came about after the Bank of Japan’s first policy statement under Kazuo Ueda. The BoJ made no changes to its ultra-loose policy, but it replaced a pledge to keep rates at or below current levels with guidance for continued yield curve control (YCC) with an aim of achieving the price stability target. Treasuries gained also after the March Personal Income/Outlays report showed a deceleration in the yr/yr PCE … Continue reading “Bond Traders Weekly Outlook: Treasuries Closed Out April Solidly Across the Curve”
Bond Traders Weekly Outlook: Fed Favorites PCE and ECI
U.S. Treasuries ended the week mostly lower, the 2-yr Treasury note yield rose six basis points this week to 4.16% and the 10-yr note yield rose five basis points to 3.57%. The 2s10s spread compressed by a basis point to -59 bps. The market continues to contend with the notion that the Fed will keep rates higher for longer. FOMC voters, Philadelphia Fed President Harker, Fed President Williams and Cleveland Fed President Mester all said Fed needs to do more … Continue reading “Bond Traders Weekly Outlook: Fed Favorites PCE and ECI”