Bond Market Commentary

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

December 11, 2017

Friday’s Action

Treasuries were little changed Friday as investors turned their attention to a better than expected jobs report. Nonfarm payrolls increased by 228,000 in November, above expectations of a 195,000 addition. The unemployment rate remained unchanged at 4.1%, a 17-year low. The benchmark 10-year note yield gained one basis point to 2.37% while the 30-year bond yield was steady at 2.76%. The two-year note yield was also flat at 1.79%. Wage data revealed average hourly earnings increased 0.2% in November after falling 0.1% the previous month. That move lifted the annual wage increase to 2.5% from 2.3% in October. In the auction space, the U.S. Treasury plans to sell $140 billion in debt next week, including $20 billion in 10-year notes and $12 billion in 30-year bonds.

Mortgage Rates

Mortgage rates ticked higher, reflecting last week’s rally in long-term interest rates, according to Freddie Mac Primary Market Mortgage Survey® (PMMS®). For the period ending Dec. 7, 2017, the 30-year fixed rate mortgage increased four basis points to 3.94%. This compares to 4.13% a year ago. The 15-year fixed rate mortgage averaged 3.36%, gaining six basis points from last week and unchanged from this time last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.35%, adding three basis points from a week ago and compares to 3.17% last year.

Municipal Market Commentary

Municipal market indices showed that muni bonds were still firmer last week, despite a moderate sell-off on Friday. As reported on December 6, U.S. municipal bond funds posted net outflows of $807.2 million compared with $100.4 million of net inflows the prior week, according to Lipper FMI. The Bloomberg 30-day visible supply fell $2.122 billion to $26.594 billion on Friday, above the 12-month average of $11.722 billion. The total is comprised of $3.975 billion of competitive bonds and $22.619 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.