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