Bond Market Commentary

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

October 17, 2017

Monday’s Action

Treasuries declined Monday, pushing yields up along the curve as investors turned their attention toward Fed commentary and the potential for a December rate hike in spite of weak inflation data. Fed-fund futures tracked by CME Group show investors currently price a 90.6% chance of a rate hike in December, which is up from 82.7% on Friday. Yields continued to tick upward following a report that President Trump was impressed by economist John Taylor after a recent interview for the next Fed Chairman position. Taylor is a namesake of a renowned monetary policy rule which would generally support higher rates. The benchmark 10-year yield rose to 2.30%, up two basis points, while the 30-year bond yield ticked up one basis point to finish the day at 2.82%. The two-year note yield closed at 1.54%, up four basis points.

Municipal Market Commentary

Monday, municipal market indices showed that muni bonds were slightly firmer. As reported on October 11, U.S. municipal bond funds posted net inflows of $43.6 million compared with $140.3 million of net outflows the prior week, according to Lipper FMI. The Bloomberg 30-day visible supply rose $25 million to $19.209 billion on Monday, above the 12-month average of $11.323 billion. The total is comprised of $7.214 billion of competitive bonds and $11.995 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.

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