Housing Hot and Debt Ceiling Top of Mind on Risk-On Day

Rates sell-off, equities rally in risk-on session. Swap rates and Treasury yields rose across the curve today as bond demand lowered, with reports of progress in debt-ceiling talks a main catalyst. The 2-year yield rose over 7bps to 4.15% while the 10-year yield climbed just over 3bps to 3.56%. JPMorgan CEO Jamie Dimon said that the US government would “probably” not default after joining other top executives in a meeting with Chuck Schumer, which pushed equities higher. The Nasdaq-100 reached highs not seen since last August.     

US Housing Starts in-line with expectations for April, but below last month’s figures. Housing starts increased in April, showing renewed strength after a yearlong slump. Single family homebuilding increased 1.6% to the highest level this year, driven by an increase in the west where home construction increased almost 60% in April. Apartment and multifamily starts also rose. Applications to build declined 1.5%, but single-family permits, however, increased. Observers are chalking it up to a low supply of existing homes, which has driven building demand despite higher mortgage rates. Still, higher rates and tighter credit standards remain a headwind for potential buyers. 

Day ahead. The session will begin with initial jobless claims and Philadelphia manufacturing figures at 8:30 AM. Fed Vice Chair for Supervision Barr will testify later in the morning, with Philip Jefferson and Lorie Logan also set to make public comments.