Bond Market Commentary

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

February 23, 2018

Thursday’s Action

Treasuries are up along the curve pulling yields down after a soft seven-year auction concluded the $258 billion debt issuance this week. The yield on the benchmark 10-year note is down two basis points to 2.92% while the yield on the 30-year bond fell two basis points to 3.20%. On the short end of the curve, the two-year note yield declined two basis points to 2.25%. Investors turned their attention to speeches from the Fed’s Regional Presidents. Atlanta Fed President Raphael Bostic, a voting member, said that things are continuing to look up and the Fed is “in an increasing-rate environment, and are in the midst of a carefully-calibrated return to a more normal Fed footing”. Meanwhile, St. Louis Fed President James Bullard, a non-voting member, warned that an aggressive monetary policy would dampen the economy and that 100-basis point hike in rates in 2018 seems too high. Friday brings another slew of Fed speakers that will garner attention on a quiet day for economic releases.

Mortgage Rates

Mortgage rates increased for a seventh consecutive week, according to Freddie Mac Primary Market Mortgage Survey® (PMMS®). For the period ending Feb 22nd, the 30-year fixed rate mortgage advanced two basis points to 4.40% at its highest since April of 2014. This compares to 4.16% a year ago. The 15-year fixed rate mortgage also trended upward, rising one basis points to 3.85% and compares to 3.37% this time last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.65%, up two basis points from a week ago and compares to 3.16% last year.

Municipal Market Commentary

Thursday, municipal market indices showed that muni bonds were unchanged. As reported on February 14, U.S. municipal bond funds posted net outflows of $443.4 million compared with $674.9 million of net inflows the prior week, according to Lipper FMI. The Bloomberg 30-day visible supply rose $581 million to $9.901 billion on Thursday, below the 12-month average of $11.405 billion. The total is comprised of $2.169 billion of competitive bonds and $7.732 billion of negotiated bonds.

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

Wells Fargo Investment Institute, Inc., is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.