Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Friday as the market digested President Donald Trump's decision to delay any further escalation with Iran until after the midterm elections. Investors are looking forward to the preliminary reading of October’s consumer sentiment data from the University of Michigan. Next week, the highlight will be on key economic releases including the September Consumer Price Index (CPI), Producer Price Index (PPI), retail sales, and industrial production. As of 6:56 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 5.25%, while the 30-year bond yield is also increasing two basis points (0.02%) to 5.62%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 4.78%.

Treasury yields were lower on Thursday despite hawkish commentary from Federal Reserve (Fed) officials. Initial jobless claims fell, while continuing claims for the prior week picked up. The yield on the 10-year note was down five basis points (0.05%) to 5.23%, while the 30-year bond yield fell seven basis points (0.07%) to 5.60%. The yield on the two-year note decreased one basis point (0.01%) to 4.76%. As of end of day Thursday (October 8), futures markets are pricing in four basis points (0.04%) worth of rate hikes at the Fed’s upcoming October meeting, with a cumulative 25 basis points (0.25%) worth of rate hikes by year-end 2026 and a cumulative 77 basis points (0.77%) worth of rate hikes by year-end 2027.

On the data front, the University of Michigan’s preliminary October reading of consumer sentiment is forecasted to come in at 47.6, lower than the prior month’s 48.1. The survey’s preliminary reading on one- and 5-10-year inflation expectations for October are expected to come in at 4.8% and 3.5%, respectively, compared to the prior month’s 4.6% and 3.4%, respectively.

In the central bank space, Boston Fed President Susan Collins is scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending October 8, the average 30-year fixed mortgage rate was up 12 basis points (0.12%) to 7.40%, versus 6.30% a year ago. The 15-year fixed mortgage rate increased 13 basis points (0.13%) to 6.73%, versus 5.53% a year ago.

The Bloomberg 30-day visible supply fell $8.244 billion to $16.590 billion on Thursday, compared to the 12-month average of $15.622 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. Additional information available by request.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.