Import / Export Prices Reduce

Rates fall as market digests weak New York manufacturing data. Swap rates and Treasury yields declined across the curve today, reacting immediately to atrocious New York manufacturing activity (2nd worst decline in the index since 2001) and weak Chinese economic data. The 10-year Treasury yield fell 5bps to 2.78%- firmly within the 10bp range it’s occupied for the past week.

Bear market rally continues. U.S. equities continued to bounce back today, recovering nearly 50% of the YTD decline in recent weeks. Today marked the 4th straight daily increase for the S&P 500 (albeit a modest one). Better-than-expected earnings and turning inflation are among the potential catalysts behind the rally. Indeed, 5-year breakevens, a market-derived measure of expected inflation, are back to trading near YTD lows at 2.66%.

Day ahead. Tomorrow will be all about housing data with housing starts and building permits headlining the otherwise quiet day. Industrial production figures will round out the day.