Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Wednesday as investors await updates on trade-deal progress ahead of the enforcement of many tariffs beginning tomorrow. As of 6:45 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.24%, while the 30-year bond yield is also increasing three basis points (0.03%) to 4.81%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 3.73%.

Treasury yields were mixed on Tuesday as the U.S. trade deficit narrowed more than expected in June following a decline in imports. The Institute for Supply Management’s services purchasing managers’ index for July unexpectedly fell though remained just in expansionary territory, while the prices paid component rose contrary to projections. The yield on the 10-year note was up two basis points (0.02%) to 4.21%, while the 30-year bond yield fell one basis point (0.01%) to 4.78%. The yield on the two-year note increased four basis points (0.04%) to 3.72%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications increased by 3.1% for the week ending August 1 versus the prior week’s decrease of 3.8%. The Department of Energy’s measure of crude oil inventories is expected to show little change for the week ending August 1 versus the prior week’s increase of 7.70 million barrels.

In the auction space, the U.S. Treasury is set to issue $65 billion in 17-week bills and $42 billion in 10-year notes.

In the central bank space, Federal Reserve (Fed) Governor Lisa Cook, Boston Fed President Susan Collins, and San Francisco Fed President Mary Daly are scheduled to speak today.

The Bloomberg 30-day visible supply rose $350 million to $18.891 billion on Tuesday, above the 12-month average of $14.077 billion.

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