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From the Desk - Economic Commentary

Brandon Casey - 6/23/2021

U.S. stocks are slightly higher Wednesday morning as investors continue to digest comments from Fed Chair Jerome Powell and a fresh batch of economic data. Powell eased fears that the Fed would raise rates much sooner than expected, again stating that current inflationary pressure is temporary. Powell said almost all, if not all, of the current pressure is tied to categories that are directly impacted by the economy reopening and prices will come down.

Looking at economic data, new home sales unexpectedly fell 5.9% in May to an annual rate of 769,000 as higher prices appear to be impacting demand. Elsewhere, MBA mortgage applications rose 2.1% last week, with much of the gain the result of increased refinance activity. The report also showed that the average interest rate of a 30-year fixed-rate mortgage increased seven basis points to 3.18%, the highest level in a month.

The June flash Markit U.S. Manufacturing PMI was unexpectedly slightly higher at 62.6, while the Services PMI fell nearly six points to 64.8, a much steeper decline than expected. Both categories remain firmly in expansion territory.

U.S. Treasury yields are little changed this morning, with the 2-year Treasury yield down 0.1 basis points to 0.25%, the 5-year Treasury yield down 0.2 basis points to 0.85% and the 10-year Treasury yield up 0.3 basis points to 1.48%. Most advance rates are unchanged today, though some points between one and five years are lower.

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