Rates Rise Amid Hawkish Fedspeak

Treasurys sell off amid hawkish Fed commentary. Swap rates and Treasury yields rose across the curve today after (generally) dovish Fed member Lael Brainard said she prefers that rates stay elevated for an extended period of time. Brainard added that despite the recent cooling of inflationary pressures, inflation remains high and must return to 2% “on a sustained basis.” The 2 and 10-year yields realized minor bumps (2-4 bps) as a result, while equities were hurt by the sentiment.

Housing data generally reflects renewed builder optimism. Housing starts declined 1.4% in December, vs. the 4.8% decline expected by analysts and greater than the 0.5% dip in November. Building permits declined 1.6% on the month, significantly muted compared to the 11.2% decline in November, and off from analysts’ expectation of 1.0% growth. According to Freddie Mac, mortgage rates are at their lowest level since last September, and single-family homebuilding climbed the most since August last month. This data also comes as U.S. homebuilder sentiment increased in January, breaking a 12-month streak of declines.

Day ahead. Fed voters Patrick Harker (neutral) and Christopher Waller (hawk) will make public comments at 9 AM and 11 AM, respectively. Existing home sales data, set for release at 10 AM, will headline an otherwise quiet data session.