Bond Market Commentary

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

January 17, 2017

Friday’s Action

Treasuries declined on Friday. Yields of U.S. government debt rose as optimistic economic data bolstered the case for the Federal Reserve to raise interest rates by its March meeting. On the data front Friday, upbeat retail sales and producer prices data showed that U.S. economic growth remains intact, weakening demand for perceived safe haven assets. Benchmark 10-year notes were last down 10/32 to yield 2.39%. Shorter-dated two-year paper slipped 1/32 to yield 1.19%. At the long end of the curve, the 30-year bond was 19/32 lower to yield 2.99%.

Mortgage Rates

Long-term U.S. mortgage rates fell this week, the second week of declines after snapping a nine-week run of increases. According to the most recent Freddie Mac Primary Mortgage Market Survey (PMMS), the 30-year mortgage rate moved in tandem with Treasury yields falling eight basis points to 4.12%. Despite the decline, the 30-year rate is still firmly higher than its 3.65% average for 2016, the lowest level on record since 1971. For the period ending January 12, the average 30-year fixed-rate mortgage fell eight points to 4.12%, compared to 3.92% this time in 2016. The 15-year fixed-rate mortgage average was 3.37%, down from 3.44% last week and compared to 3.19% a year ago. Five-year hybrid adjustable-rate mortgages (ARM) declined to 3.23%, down from 3.33% in the previous period and compared to 3.01% at this time last year.

Municipal Market Commentary

Last week, municipal market indices were moderately firmer. Tax-exempt new issue supply is expected to total approximately $8.3 billion this week, slightly above the 2016 weekly average of $8 billion. The Bloomberg 30-day visible supply fell $775 million to $14.705 billion on Friday, above the 12-month average of $12.629 billion. The total is comprised of $2.352 billion of competitive bonds and $12.353 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 & Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors, and other Wells Fargo affiliates. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.

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