Bonds Hold Gains Ahead of Fed Decision as Housing Starts Hit Six-Year Low

UMBS 5.0 trading at 98.43 (+0.18) and 10-year yields at 4.427% (-0.047%) through midday as markets hold constructive into FOMC Day 1. Housing starts sank to a six-year low in May, adding a weak-economy signal that offsets the morning's hotter-than-expected import prices print. TBWS showing UMBS 5.5 at 100.46 (+15bps) at 1:30 PM — bonds holding most of Tuesday's gains with the Iran peace deal still providing a supportive backdrop. All eyes on Wednesday afternoon: Fed widely expected to hold, but Warsh's tone on future hikes is the real market risk.