Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Thursday as investors digest last night’s comments from President Donald Trump on the Iran war and ahead of today’s economic releases, including data on job cuts, jobless claims, and the trade balance. Markets will be closed tomorrow for Good Friday, but investors will be watching for the March jobs report. As of 6:55 AM ET, the yield on the 10-year note is rising five basis points (0.05%) to 4.37%, while the 30-year bond yield is also increasing five basis points (0.05%) to 4.95%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up five basis points (0.05%) to 3.85%. 

Treasury yields were little changed on Wednesday as the Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) unexpectedly rose to 52.7 in March, accompanied by a larger-than-expected increase in the prices paid component to 78.3. Meanwhile, the ADP Employment Report for March recorded significantly stronger-than-expected private nonfarm payroll gains. Retail sales exceeded projections in February, while business inventories unexpectedly declined in January. The yield on the 10-year note was unchanged at 4.32%, while the 30-year bond yield fell one basis point (0.01%) to 4.90%. The yield on the two-year note increased one basis point (0.01%) to 3.80%. As of end of day Wednesday (April 1), futures markets are pricing in one basis point (0.01%) worth of rate hikes at the Federal Reserve's (Fed) upcoming April meeting, with a cumulative six basis points (0.06%) worth of rate cuts by year-end 2026.

On the data front, the Challenger Report on job cuts for March will be released today, with February having shown a 71.9% year-over-year decrease. The U.S. trade deficit is expected to widen in February to $60.6 billion from the prior month’s $54.5 billion, with exports projected to fall 2.3% month-over-month (MOM) and imports forecasted to decline 0.2% MOM, versus the prior month’s increase of 5.5% and fall of 0.7% MOM, respectively. Initial jobless claims for the week ending March 28 are expected to come in at 212,000 versus the prior week’s 210,000, while continuing claims for the week ending March 21 are expected to rise to 1.84 million from the prior week’s 1.82 million.

In the auction space, the U.S. Treasury is set to issue $80 billion in four-week bills and $75 billion in eight-week bills.

In the central bank space, Fed Vice Chair for Supervision Michelle Bowman and Dallas Fed President Lorie Logan are scheduled to speak today.

The Bloomberg 30-day visible supply rose $21 million to $13.005 billion on Wednesday, below the 12-month average of $14.145 billion.

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