Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Wednesday ahead of today’s Federal Open Market Committee meeting, with the Federal Reserve (Fed) expected to keep its benchmark interest rate unchanged during Jerome Powell’s last meeting as the official Fed Chair. Investors are also looking forward to major technology firms’ earnings after markets close today, while economic releases include the March advance goods trade balance and preliminary reading of durable goods orders. As of 6:56 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.36%, while the 30-year bond yield is increasing two basis points (0.02%) to 4.95%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 3.85%. 

Treasury yields were mixed on Tuesday as April consumer confidence unexpectedly increased and markets continued to await progress on reopening the Strait of Hormuz. Meanwhile, measures of February home prices came in below expectations. The yield on the 10-year note was up one basis point (0.01%) to 4.35%, while the 30-year bond yield fell two basis points (0.02%) to 4.93%. The yield on the two-year note increased four basis points (0.04%) to 3.84%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications decreased by 1.6% for the week ending April 24 versus the prior week’s increase of 7.9%. The advance goods trade balance for March is expected to show a deficit of $88.0 billion versus the prior month’s deficit of $83.5 billion. The preliminary reading of March’s durable goods orders is forecasted to show a 0.5% month-over-month (MOM) increase, compared to the prior month’s 1.3% decline. The preliminary reading of March building permits is expected to come in at an annualized 1.39 million corresponding to a MOM decrease of 0.3%. Housing starts are expected to have been an annualized 1.38 million in March corresponding to a MOM decrease of 0.4%. Retail inventories are forecasted to have increased by 0.1% MOM in March, versus the prior month’s increase of 0.2%. The preliminary March reading of wholesale inventories is expected to show an increase of 0.4% MOM, compared to the prior month’s 0.8% increase. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 190,000 barrels for the week ending April 24 versus the prior week’s increase of 1.93 million barrels. 

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills.

The Bloomberg 30-day visible supply rose $1.551 billion to $16.335 billion on Tuesday, above the 12-month average of $14.040 billion.

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