In choppy trading, U.S. equities finished with modest losses, as focus on the run in Treasury yields, which has taken the rate on the 10-year Treasury note very near the 3.00% mark for the first time in over four years, appears to be fraying investors’ nerves. A busy week on the economic and earnings fronts got rolling, with Hasbro posting softer-than-expected results, while existing home sales and business activity reports topped forecasts. The U.S. dollar added to its recent run, crude oil prices were higher, and gold was lower.

The Dow Jones Industrial Average (DJIA) declined 14 points (0.1%) to 24,449, the S&P 500 Index was nearly unchanged at 2,670, and the NASDAQ Composite moved 18 points (0.3%) lower to 7,129. In moderate volume, 730 million shares were traded on the NYSE and 1.7 billion shares changed hands on the NASDAQ. WTI crude oil increased $0.24 to $68.64 per barrel and wholesale gasoline was $0.03 higher at $2.13 per gallon. Elsewhere, the Bloomberg gold spot price tumbled $11.64 to $1,324.72 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.7% at 90.93.

Existing-home sales in March rose 1.1% month-over-month (m/m) to a 5.60 million annual rate, compared to the Bloomberg forecast of a 5.55 million pace, and versus February’s unrevised 5.54 million rate. Sales of single-family homes ticked 0.6% higher m/m, but were 1.0% lower than year-ago levels, while purchases of multi-family structures grew 5.2%, but the y/y pace remained lower. The median existing-home price was up 5.8% y/y at $250,400, marking the 73rd straight month of gains. Unsold inventory came in at a 3.6-months pace at the current sales rate, down from 3.8 months a year ago. Inventory of homes for sale climbed 5.7% m/m but was still 7.2% lower y/y. Sales declined in the South and the West, while the Midwest and Northeast saw solid gains. Existing home sales account for the majority of the housing sales market.

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) that releases the report, said a reversal from weather-impacted declines seen in February helped overall sales activity. However, Yun added that ” The unwelcoming news is that while the healthy economy is generating sustained interest in buying a home this spring, sales are lagging year ago levels because supply is woefully low and home prices keep climbing above what some would-be buyers can afford.” This was the second-straight monthly gain, but existing home sales are based on contract closings instead of signings and the recent grind higher in interest rates will likely have an impact on affordability going forward, which already remains under pressure.

Treasuries were lower, as the yields on the 2-year and 10-year notes rose 3 basis points to 2.48% and 2.98%, respectively, while the 30-year bond rate ticked 1 basis point higher to 3.14%. Treasury yields have seen an accelerated upside move as of late, with the 10-year note flirting with 3.00% for the first time since early 2014, while the yield curve continues to flatten.

Schwab Center for Financial Research – Market Analysis Group

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