Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Monday ahead of today’s economic data from the Federal Reserve (Fed) bank of Dallas. Investors are also turning their attention to this week’s economic data, including June’s Institute for Supply Management (ISM) manufacturing purchasing managers’ index and jobs report, due on Wednesday and Thursday, respectively. As of 7:01 AM ET, the yield on the 10-year note is unchanged at 4.37%, while the 30-year bond yield is also unchanged at 4.86%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 4.10%. 

Treasury yields were mostly lower on Friday as the advance goods trade deficit widened more than expected in May, reaching $105.8 billion, while the preliminary estimate for wholesale inventories showed a smaller-than-expected month-over-month (MOM) increase of 0.3%, following upward revisions to the prior month’s data. Meanwhile, retail sales exceeded projections in May, rising 0.6% MOM. The finalized reading of June consumer sentiment from the University of Michigan was revised higher to 49.5, while the one-year inflation expectation held steady at 4.6% and the 5–10-year inflation expectation was revised lower to 3.3%. The yield on the 10-year note was down two basis points (0.02%) to 4.37%, while the 30-year bond yield was unchanged at 4.86%. The yield on the two-year note decreased three basis points (0.03%) to 4.09%.

On the data front, the Dallas Fed’s Texas Manufacturing Outlook Survey for June will be released, with the general business activity index expected to come in at 1.0, up from the prior month’s 0.4.

In the auction space, the U.S. Treasury is set to issue $92 billion in 13-week bills and $79 billion in 26-week bills.

Mortgage rates were higher in the latest week. For the week ending June 25, the average 30-year fixed mortgage rate was up two basis points (0.02%) to 6.49%, versus 6.77% a year ago. The 15-year fixed mortgage rate increased three basis points (0.03%) to 5.84%, versus 5.89% a year ago.

The Bloomberg 30-day visible supply rose $287 million to $13.140 billion on Friday, below the 12-month average of $13.865 billion.

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