Bond Market Commentary

Over in bond land, markets are closed for the holiday. Worries about further U.S. trade tensions with China eased following a softened stance from President Donald Trump on Sunday. Markets had become concerned about significant tariff increases that President Trump announced in response to China’s rare earth export restrictions. Amid the ongoing U.S. government shutdown, non-critical economic data releases scheduled for this week are likely to be delayed.

Treasury yields were lower on Friday as the University of Michigan’s preliminary consumer sentiment index for October was little changed from the prior month, while inflation expectations eased to 4.6% for the one-year outlook and remained steady at 3.7% for the five-to-ten-year horizon. The yield on the 10-year note was down 11 basis points (0.11%) to 4.03%, while the 30-year bond yield fell 10 basis points (0.10%) to 4.62%. The yield on the two-year note decreased nine basis points (0.09%) to 3.50%.

In the central bank space, Federal Reserve Bank of Philadelphia President Anna Paulson is scheduled to speak today.

Mortgage rates were lower in the latest week. For the week ending October 9, the average 30-year fixed mortgage rate was down four basis points (0.04%) to 6.30%, versus 6.32% a year ago. The 15-year fixed mortgage rate decreased two basis points (0.02%) to 5.53%, versus 5.41% a year ago.

The Bloomberg 30-day visible supply fell $187 million to $11.122 billion on Friday, below the 12-month average of $13.735 billion.

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