US tariff revenues have surged, prompting the CBO to estimate a $4trn deficit reduction over the next decade, nearly offsetting the fiscal gap from Trump-era tax cuts. S&P and Fitch both affirmed the AA+ rating with stable outlooks, though Fitch cautioned that long-term debt risks remain unaddressed and projected debt-to-GDP to climb to 127% by…

U.S. Treasury auctioned off two-year notes at a coupon of 3.625%, with a high yield of 3.641%, a median yield of 3.600%, and a robust bid-to-cover ratio of approximately 2.69, indicating solid investor demand and relatively healthy auction mechanics—competitive bids totaled about $185.7 billion, of which $69.0 billion were accepted, while noncompetitive bids added another…

July new home sales slowed to an annualized pace of 652k, down 0.6% m/m and 8.2% y/y, as higher mortgage rates and softer labor conditions continued to weigh on demand. Despite June being revised up to 656k and the 30Y mortgage rate easing to 6.58%, wage growth decelerated to 3.9%, leaving affordability under pressure. Median…

Powell’s Jackson Hole speech underscored a shift in the Fed’s collective stance, framing risks as balanced between inflation and employment rather than dominated by inflation alone. While tariffs add uncertainty to the inflation outlook, the Fed views the shock as largely one-off, with long-term expectations continuing to ease. The labor market shows softening supply and…

Market RecapU.S. Treasuries traded with volatility on August 21 as investors digested conflicting economic signals. The 10-year yield closed near 4.33%, while the 30-year hovered around 4.9%, both modestly higher than the prior day. Trading volumes remained subdued ahead of the Jackson Hole symposium. Key Developments Market Sentiment Bottom LineMixed macro data left Treasuries oscillating…

Global interest rate and credit markets are currently in a delicate balance. The market generally anticipates an increased likelihood of rate cuts over the next few quarters due to slowing economic growth and relatively stable inflation, although the magnitude of any cuts is expected to be limited. The labor market remains resilient, suggesting that policy…

 July US housing data showed single-family starts rose 2.8% to 939k and permits edged up 0.5% to 870k, breaking a 4-month decline, while overall permits fell 2.8% to 1.354mn, a 5-year low, dragged by a near 10% drop in multifamily. Total starts jumped 5.2% to 1.428mn as apartment construction rebounded, with 5+ unit starts up…

 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…

July PPI rose 0.9% MoM, well above the 0.2% consensus and prior 0%, lifting the YoY rate to 3.3% vs 2.5% expected and 2.4% prior. Services surged 1.1%, over 70% of the gain, driven by machinery and equipment wholesale margins, portfolio management fees, and higher hotel and airfare prices. Goods rose 0.7%, led by a…

Chicago Fed’s Goolsbee voiced skepticism over assumptions that tariffs won’t fuel inflation or weaken the labor market, stressing the need for several months of falling inflation alongside a clear cooling in jobs before supporting rate cuts. He noted that the recent slowdown in job growth may reflect reduced immigration rather than weak demand, with a…