Daily Market Color

Yields Fall on April Manufacturing Contraction

Short-term rates decline on manufacturing PMI data. Rates were little changed in the early goings of the session but quickly dropped after US PMI showed a slight manufacturing contraction in April. PMI was well below the forecast, and short-term rates fell ~4bps as a result. Yields grinded lower throughout the remainder of the session after a $69B 2y UST auction saw improved demand. Meanwhile, equities and the Magnificent Seven rallied ahead of imminent earnings calls, with NVDA leading gains at 3.65%. The tech-heavy NASDAQ led major equity indices with a 1.59% gain while the S&P 500 rose 1.20%.

New US home sales reach highest level since September 2023. On an annualized basis, new home sales climbed 8.8% to 693,000 in March, blowing past estimates and up from February’s downwardly revised 637,000 new home sales. Sales were boosted by a 477,000 increase in housing supply, the most since 2008, which kept house prices in check. Property economist at Capital Economics Thomas Ryan said, “It is encouraging that new home sales rose by such a large margin in March, despite mortgage rates hovering around 7% for most of the same month.”

Tesla jumps over 7% higher post-close despite weak Q1 results. A rough year for Tesla may be turning around, as shares soared in after-hours trading ahead of the 5:30 ET earnings call. The move hinged on comments that “We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.” The new models would include more “affordable” options, which provided enough optimism to offset a revenue and earnings miss. Q1 EPS was reported at $0.45 (vs. the $0.52 estimate), while revenue also fell short of expectations at $21.3B.

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