Yields Fall as FOMC Minutes Highlight Day

Swap rates and Treasury yields fall after FOMC minutes, data prints. Treasurys rallied today, the 2-year yield falling ~2bps to 4.35% while the 10-year yield decreased ~6bps to 3.68%. The move came after the release of FOMC minutes and U.S. mortgage application data, the latter of which revealed the largest weekly decline of applicants (-10.3%) in three months. According to the Mortgage Bankers Association, the decline was led by a dip in the purchase index (12%) and in refinancing applications (4.4%). Elsewhere, equities fared well today, the S&P 500 gaining .75% while NASDAQ realized a .69% boost.

FOMC Minutes reinforce hawkish sentiment. The December FOMC meeting minutes were released today and doubled down on the Fed’s messaging that slowing the pace of rate hikes “was not an indication of any weakening of the Committee’s resolve to achieve its price stability goal or a judgement that inflation was already on a persistent downward path”. Committee members also noted that job gains have been robust in recent months, the unemployment rate has remained low, and inflation remains elevated due to supply and demand imbalances. 

Day ahead. Fed members Raphael Bostic (non-voter, hawk) and James Bullard (voter, hawk) will make public comments at 9:20 AM and 1:20 PM ET, respectively. U.S. balance of trade will be released at 8:30 AM, which will be followed by jobless claims, PMI, and crude oil stock change data later in the morning.