The 10-year Treasury yield adds another basis point following the FOMC minutes, now ahead 2.5% bps on the session to 2.43%. Looking at a rate more sensitive to Fed policy, the 5-year note yield jumps 4.5 bps to 1.625%.
The minutes show many committee members believing the labor market is improving faster than anticipated across a whole range of indicators, and the time is getting near for when it can no longer be described as underutilized.
Many members say a range of labor market indicators had improved more in recent months than they had earlier anticipated, according to the minutes of the late July FOMC meeting. "The characterization of labor market underutilization might have to change before long, particularly if progress in the labor market continued to be faster than anticipated."
The committee voted 9-1 to maintain the taper and reiterate its commitment to keep rates lower than normal for longer. Dissenting was Philadelphia Fed boss Charles Plosser, who argued the others are underplaying the improvement in the labor market and the march of inflation towards the 2% target.
"Builders are seeing a noticeable increase in the number of serious buyers entering the market,” says NAHB Chairman Kevin Kelly, after his firm's Housing Market Index rises to 55 this month. Challenges still remain, he adds, noting tight credit, and shortages of finished lots and labor.
The HMI's three sub-components all rose in August, with the current sales conditions and expectations for future sales gauges each ahead by two points to 58 and 65, respectively. The gauge of traffic for prospective buyers added three points to 42.
Russia may impose restrictions or a ban on vehicle imports from Western countries, if the U.S. and EU impose additional sanctions on Moscow, Reuters reports quoting the Vedomosti.
The paper says that the proposals have already been sent to Putin for consideration but no decision has been made yet.
The new ban, however, would not apply to foreign automakers' production inside Russia. Ford (NYSE:F), Volkswagen (OTCQX:VLKAY), Renault (OTC:RNSDF), Toyota (NYSE:TM) and Hyundai (OTC:HYMLF) all have production facilities inside the country.
Unless he's talking about hitting 2.2% today, it's not such an outlandish prediction given the big rally in Treasury prices of late. On the session, the 10-year yield is lower by a full seven basis points to 2.33%.
As for 2%, Gundlach - speaking on a CNBC interview - doesn't think we'll get there, but momentum is a hard thing to judge, and there's plenty pushing yields lower right now.
"I see the labor markets as remaining some way from meeting the FOMC's goal of full employment," says Minneapolis Fed boss Kocherlakota, not buying the sharp drop in headline unemployment as an indicator of strength in the jobs market. While he sees the headline rate maybe dropping to 5.7% this year from 6.2% currently, he's in no rush to tighten policy.
Kocherlakota is instead looking at indicators like too many people aged 25-54 not working, and a high percentage of workers saying they can only find part-time employment.
As for inflation, he expects it to stay below the Fed's 2% target until 2018.
Bill Ackman's Pershing Square has sued the U.S. government, claiming that its stripping of Fannie Mae's (OTCQB:FNMA) and Freddie Mac's (OTCQB:FMCC) profit illegally short changes investors in the mortgage companies' common stock.
Hedge funds have previously sued the government over the two, although most of those lawsuits focused on the companies' preferred stock.
Pershing is accusing the government's "brazen" practice since 2012 of funneling virtually all profit from Fannie and Freddie to the U.S. Treasury Department.