Risk-On Evaporates

Tsys trading weaker after the bell, off midday lows where 30YY tapped 3.1771% high, yield curves inching steeper on the day: 2s10s +1.084 at -20.257, 5s10s +1.040 at -11.349, amid light summer volumes (TYU2 <835k after the bell).

• Rates appeared to draw at least some short cover support as stocks reversed gains early in the second half. The reversal in stocks coincided with headlines that Apple plans to slow hiring expenditures for some teams next year.
• No reaction to the weaker than expected homebuilder sentiment report, NAHB July housing index of 55 vs. 65 est is the largest monthly decline in the index this side of the pandemic and prior to the pandemic is the lowest level since May'15.
• Light FI option related hedging in the first half while incoming corporate issuance generated some early rate lock hedging on the following:
  • $7B #JP Morgan $3.5B 6NC5 +175, $3.5B 11NC10 +193
  • $6.5B #Wells Fargo $3B 6NC5 +175, $3.5B 11NC10 +195
  • $4B #Morgan Stanley $2B 4NC3 +152, $2B 11NC10 +192
  • $2.5B *Bank of Montreal 3Y SOFR+79
• On tap for Tuesday:
  • Housing Starts (1.549M, 1.580M); MoM (-14.0%, 2.0%)
  • Jul-19 0830 Building Permits (1.695M, 1.650M); MoM (-7.0%, -2.7%)