Rates Climb Once Again Despite Weak Data

Rates rebound following 2-year note auction. Treasury yields and rates rose significantly following the 2-year note auction, where the offered yield for the 2-year was 3.307%, the highest we have seen since 2007. By the end of the day, the 10-year Treasury yield rose to 3.046%, a ~3 bp increase. Rates have climbed nearly ~20bps across the curve over the past five sessions as the market prepares for Fed Chair Jerome Powell’s public comments on Friday.

New home sales and S&P global U.S. composite PMI fall well below forecasts. Sales of new houses in the U.S. fell 12.6% MoM to an annualized rate of 511k in July, 15k below forecasts and the lowest reading since January of 2016. This is a continued trend of the slowing housing market that is the result of rising borrowing costs and prices, as well as a fall in demand. Elsewhere, the S&P global U.S. composite PMI fell to 45 in August from 47.7 in July, which marks the fastest decrease in total business activity since May of 2020. 

Day ahead. Tomorrow marks the beginning of the Fed’s annual economic symposium in Jackson Hole, which highlights a busy day overall. There will also be many data releases, including U.S. durable goods orders for July at 8:30 AM ET, pending home sales at 10:00 AM ET, and EIA gasoline stocks change at 10:30 AM ET.