Yield Curve Steepens on Recovery Optimism

10y UST yield has biggest intraday move in nearly 3 weeks

Strong corporate earnings and a rally in commodity prices pushed swap rates and yields higher as the 10-year US Treasury yield increased 4 basis points today to close at 1.29%.  It was the largest one-day move since early August. Best Buy and JD.com reported stronger than expected results that buoyed market confidence that consumer demand remains high.  Additionally, commodities saw prices rally in oil and iron.  The market continues to anticipate Federal Reserve Chairman Powell’s speech on Friday.

New homes sales prices hit new record

The U.S. Census Bureau and Department of Housing and Urban Development reported today that the median price of a new home increased a staggering 18.4% from last year to a record $390,500.  Even with new home prices reaching record highs, the same report showed that new home sales increased 1% month-over-month in July.  It was the first increase for new home sales in the past four months.  The report also noted that 29% of the 367,000 new homes available for sale in July had not yet been started.  A separate report on Monday showed that sales of existing homes also rose last month.

Mid-Atlantic business activity slows in August

The Federal Reserve Bank of Richmond reported that business activity for factories in the mid-Atlantic region declined in August.  Manufacturers in the area reported that the new orders index fell to 5 in August from an index level of 25 in July, and that a shipments index fell to 6 in August from an index level of 21 in July.  The positive index values indicate that business activity is still growing, but at a significantly lower pace compared to last month.  The report surveys manufacturers in the Carolinas, District of Columbia, Maryland, Virginia, and West Virginia.