The two-year Treasury note ended Thursday at a yield of 4.79%, a full percentage point over the closing yield on May 4. There are a number of contributing factors to the sell-off, although unwinding of the post SVB Bank collapse rally, massive Treasury supply and a more hawkish Fed outlook were the most obvious drivers. Ultimately, the U.S. economy remains too strong.

The economic calendar was particularly light this week, but the few releases that mattered were again frustratingly solid. On Tuesday, May housing starts unexpectedly jumped +21.7% to a 1.63 million unit annual rate, the highest in over a year and well above the median forecast of 1.4 million units. With the May surge, starts are suddenly up +5.7% year-over-year.

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