Rates Extend Climb, DJIA Closes at Historic Level

Rates and equities rise for a second day. Momentum from yesterday’s hawkish Fed speakers pushed swap rates ~3-4bps higher across the curve today, nearly reversing Wednesday’s CPI driven decline. 5-year swap rates are now ~20bps lower month-to-date. The Dow Jones Industrial Average headlined equities today, closing above 40,000 for the first time and logging a 5-week winning streak. Equities are on pace for the strongest month of 2024 as analysts await Nvidia Corp. earnings next Wednesday.  

China announces property market rescue plan. Today, China announced a $42 billion package to purchase excess inventory from developers, lowered minimum down-payments for first-time and second-home buyers and eliminated the nationwide minimum mortgage rate. A gauge of Chinese property stocks climbed ~10% on the news for a second consecutive day and is now ~17% higher YTD.

Next Week: FOMC Minutes and more. It’s been an exciting week of inflation data, and next week promises more action led by Tuesday’s FOMC meeting minutes release. Bank of America analysts wrote in a note today, “The minutes from the May FOMC meeting should sound more hawkish on the margin than Chair Powell’s press conference.” PMI and new home sales data will follow on Wednesday, and durable goods orders and Michigan sentiment data will cap the week on Friday.