Rates Rise For Second Consecutive Day

Fed commentary, data beat pushes rates higher. Swap rates and Treasury yields rose across the curve today, spurred largely by commentary from Richmond Fed President Barkin. A beat in New York state manufacturing activity (10.8 versus an estimate of -18.0) also contributed to the move higher; the 2-year yield rose ~10bps to 4.19% while the 10-year yield climbed over 9bps to 3.60%. Elsewhere, equities rose on the day, with the S&P, DOW, and NASDAQ all rising near 0.30%. 

Fed official Barkin voices confidence in banks, economy. Thomas Barkin said today that he needs to see more evidence that inflation is easing back to the stated Fed goal of 2%, while adding that “our economy works just fine with rates at this level,” when asked if the current level of rates could hurt certain sectors of the economy. Barkin also appeared bullish on the outlook for the banking sector, saying that “I’m pretty reassured by what I’m seeing, but you never want to declare victory.” Futures currently suggest an ~88% chance of a 25bp hike at May’s FOMC meeting, especially as Fed officials continue to back the strength of the banking sector while searching for stronger evidence of decreasing inflationary pressures.

Day ahead. Building permit and housing data will lead the day at 8:30 AM. Hawkish Fed voter Michelle Bowman will make public comments at 1 PM.