Presented by Stifel, Nicolaus & Company, Incorporated Economic and Fixed Income Insights
Economic and Fixed Income Insights
Earlier this week, the yield on the 10-year U.S. note hit 3% for the first time since 2014 as investors focused on strong corporate earnings and the prospect of higher inflation. The 10-year yield is a barometer that influences borrowing costs for consumers, corporations and state and local governments. Bond yields have slumped near historic lows in recent years on lower inflation and sluggish economic results. A rise to 3% signifies in part that the US economy is returning to near normal conditions. In other economic news, U.S. new home sales increased 4% from the prior month to a seasonally adjusted rate of 694,000 units. Housing demand has remained strong in recent months as buyers feel confident in the overall tone of the economy. As borrowing costs rise, demand will likely fall as the median price of homes, propped up by a supply shortage, is rising faster than wages. In the bond market, as noted above, the 10-year UST is making headlines, but taxable and tax-exempt rates all along the curve are up significantly. The 10-year UST was 17 basis points higher for the week, and the long bond was up 16 basis points. Tax-exempt rates showed similar volatility with the 10-year MMD up 10 basis points and the 30-year MMD up 12 basis points
Interest Rate Observations
Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of April 24, 2018.
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