Bond Market Commentary

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

June 19, 2019

Tuesday's Action

Treasuries strengthened along the curve sending yields lower after the European Central Bank President, Mario Draghi, suggested an increase in stimulus will be provided if inflation fails to hit European targets. These dovish comments sent bond yields around the world declining with German yields hitting record lows, and the yield on the French 10-year turning negative for the first time since 1985. In the U.S., the yield on the benchmark 10-year bond slipped three basis points to 2.06%, the lowest level since September 2017. Meanwhile, the 30-year bond yield hit the lowest level since October 2016 after falling three basis points to 2.55%. On the short end of the curve, the yield on the two-year note rose one basis point to 1.87%. Bond yield are declining as the Federal Reserve began its two-day meeting that wraps up on Wednesday. Investors have increased bets on an interest rate cuts by the end of 2019 as the latest CME Group projections suggested the probability of at least one rate cut by September had increased from 49% to 94%. In the auction space, the U.S. Treasury Department sold $26 billion in 52-week bills at a high yield of 1.985%. The bid-to-cover ratio was 2.88, below the prior 2.95 reading.

Municipal Market Commentary

Tax-exempt new issue supply is expected to total $7.5 billion during the week of June 17, compared to $9.4 billion the previous week and the 2019 weekly average of $5.4 billion. The Bloomberg 30-day visible supply rose $772 million to $10.388 billion on Tuesday, above the 12-month average of $8.850 billion.

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

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