Yields inch lower as US-Iran talks stall. Treasury yields traded in a 3-5 bp range today, though ultimately ended slightly lower following an intraday dip in oil prices. The 2-year yield nearly closed flat at 4.17%, while the 10-year yield closed 2 bps lower at 4.70%. Meanwhile, equities sold off as semiconductor stocks led the decline, with the S&P 500 and NASDAQ closing 0.69% and 1.33% lower, respectively.
Pending home sales fall on rising mortgage rates. Pending home sales dropped 2.3% from June, the lowest level since the start of the year and the second-worst reading since 2001. Lawrence Yun, chief economist at the National Association of Realtors, explained, “The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings.” The 30-year mortgage rate currently sits near a one-year high, while elevated home prices also weighing on sales activity. Separately, July housing starts also disappointed today, coming in at 1.24 million, below expectations of 1.38 million and down from June’s revised 1.42 million.
US-Iran talks remain at a halt. President Trump said there are no current or planned talks with Tehran, despite declaring yesterday that back-channel communication was open with Iran’s Islamic Revolutionary Guard Corps. Iran denied the claim, and Iran’s parliament speaker accused the US of “squeezing” the country. Meanwhile, Trump released an image depicting Hormuz as a “new US Territory,” after Tehran reiterated its conditions for reopening the strait. A commercial vessel transiting the waterway was also reportedly struck by an “unknown projectile,” and oil prices reached their highest level of August.