Treasurys Pull Back from Post-Fed Decision Rally Amid Robust Housing, Labor Data

Economic data reported on Thursday confirmed continued strength in both homebuilding and employment data.  The number of single-family housing starts rose 6.5% during February to a seasonally-adjusted 872,000, the largest mark since October 2007.  Building permits in the single-family space increased 3.1% for the month, albeit permits for the single and multi-family sectors combined were down 6.2%.  Housing starts in the multi-family space remained volatile, declining 3.7% to a 416,000 construction rate.  Overall housing starts were up a solid 3% for the month to a 1.29 million-unit pace, up 6.2% compared to a year earlier.

In a separate report, initial jobless claims for the week edged lower to 241,000, compared to 243,000 in the previous week.  The figure marked the 106th consecutive week under the 300,000 threshold, in support of a labor market near full employment.  Adding to the positive weekly claims figure, the JOLTS report showed 5.626 million job openings during the month of January, exceeding expectations of 5.556 million and holding near its strong 2-year trend.  An acceleration in hiring was also reported at 2.6%, one of the best readings since the recession.

The global wave of populism which prompted a rush to safe haven assets abroad failed to win in the Netherlands yesterday, as Dutch voters showed their support for existing Prime Minister Mark Rutte.  This helped the Liberal Party secure 33 of the 150 seats in the lower house of parliament.  Leading up to the election, concerns were growing that the anti-Islam Freedom Party of Geert Wilders would capture the majority of votes and in turn, lead to an eventual exiting of the European Union by the nation.  Markets welcomed the nod of confidence towards the EU, with hopes that the voter sentiment would carry into the French presidential elections set for next month.  The euro rose to its highest level in over a month following the news.   

Equity and bond markets were relatively tempered in the day following the Fed’s decision to hike rates and maintain its existing monetary policy.  Major stock indices were mixed on the day with the Dow Jones and S&P 500 finishing down roughly 0.1% while the Nasdaq closed just above flat.  Treasurys sold off from the beginning of the session, with yields/swap rates rising 2-5 basis points across the curve, and the 10-year yield moved higher to 2.54%.