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 NAHB homebuilder sentiment unexpectedly fell to 32 in Aug, the lowest since Dec 2022 and below market expectations of 34, with affordability remaining the key drag as buyers wait for lower mortgage rates. Builders continue to use incentives, with 37% cutting prices by an avg 5% and 66% offering other concessions, the highest since the pandemic. While traffic ticked up to a 3-month high, overall sales remain sluggish despite mortgage rates easing to 6.58%, the lowest since Oct 2023. Markets expect the Fed to resume rate cuts in Sep, potentially easing financing costs and stabilizing housing, though upcoming July housing starts and permits are unlikely to show material improvement given prior declines. In rates, UST yields extended their climb for a third session, with 10Y hitting a 2-week high after briefly dipping below 4.29% in European trading before rebounding to 4.35% in early US hours and settling near 4.33% (+1bp). The 2Y also touched a low of 3.74% before rising to 3.77%, the highest since last Tue, and ending around 3.76% (+1bp). Markets now await Aug housing starts (cons 1.30mn vs prior 1.321mn) and permits (cons 1.388mn vs prior 1.393mn) for further signals on the housing outlook.