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Bond Market Commentary

Updates on bond market data, news, and activity each day.

October 15, 2021


In bond land, Treasuries are declining ahead of the opening bell on Friday, as investors await another round of economic data releases. The yield on the benchmark 10-year note is up three basis points to 1.54%, but still set to fall six basis points from where it settled last Friday (October 8). The 30-year bond rate is adding three basis points to 2.05%, while on the shorter-end of the curve, the yield on the two-year note is holding steady at 0.36%. On the data front, an update is expected to show retail sales dipped 0.2% last month after rebounding 0.7% in August from July’s 1.8% slide.

Meanwhile, Import prices are anticipated to climb 0.6% in September after falling 0.3% during the prior month, while the year-over-year reading likely accelerated to 9.4% from 9.0% in August.

Market participants will also assess a preliminary October reading of consumer sentiment from the University of Michigan at 10am ET, with the gauge anticipated to tick up to 73.1 from September’s 72.8 reading. In central bank news, New York Fed President John Williams and St. Louis Fed president James Bullard are slated to give remarks at separate engagements today.

Yesterday, Treasury yields fell as data on inflation and the U.S. labor market helped ease concerns that the Fed would push up their timeline for raising rates. Weekly initial jobless claims came in at a fresh pandemic low of 293,000, while a reading of producer prices rose 0.5% in September, moderating from the previous month’s 0.7% uptick.

The rise in the two-year note yield stalled after climbing for seven straight days, its longest streak since June. Meanwhile, the yield curve continued to flatten as longer-dated yields declined. The benchmark 10-year yield dipped three basis points to 1.51%, while the 30-year bond rate fell two basis points to 2.02%.

Commentary from Federal Reserve officials garnered attention, with St. Louis Fed President James Bullard, San Francisco Fed President Mary Daly, and Richmond Fed President Tom Barkin each supporting the notion of tapering the U.S central bank’s pandemic-era asset purchases.

Mortgages

Mortgage rates resumed their upward trajectory in the latest week, as inflationary pressures and prospects of tightening monetary policy continue to modestly lift U.S. Treasury yields, according to the Freddie Mac Primary Market Mortgage Survey® (PMMS®). For the period ending October 14, 2021, the 30-year fixed rate added six basis points to 3.05%, surpassing the 3% threshold and rising to its highest point in six months, but still below a near-term peak of 3.18% in April. This compares to 2.81% at this time last year and to its record low of 2.65% reached in early January. The 15-year fixed mortgage rate jumped seven basis points to 2.30%, versus 2.35% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 2.55%, up three basis points from the prior week and compares to 2.90% at this time last year.

Municipal Market Commentary

The Bloomberg 30-day visible supply fell $125 million to $17.930 billion on Thursday, above the 12-month average of $11.482 billion.

This information is obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed by Wells Fargo Advisors.

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