Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Tuesday ahead of today’s June trade balance and July’s services purchasing managers’ index (PMI) from the Institute for Supply Management (ISM). As of 6:47 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.21%, while the 30-year bond yield is also increasing two basis points (0.02%) to 4.81%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 3.70%.

Treasury yields were mostly lower on Monday as factory orders for June declined in line with expectations. The yield on the 10-year note was down three basis points (0.03%) to 4.19%, while the 30-year bond yield also fell three basis points (0.03%) to 4.79%. The yield on the two-year note was unchanged at 3.68%.

On the data front, the U.S. trade deficit is expected to narrow down in June to $61.0 billion from the prior month’s $71.5 billion. S&P Global’s finalized services and composite PMIs for July are expected to come in at 55.2 and 54.6, respectively, both unchanged from the prior reading. Meanwhile, ISM’s July services PMI and the prices paid component are expected to register 51.5 and 66.5, respectively, versus the prior month’s 50.8 and 67.5, respectively.

In the auction space, the U.S. Treasury is set to issue $85 billion in six-week bills, $50 billion in 52-week bills, and $58 billion in three-year notes.

The Bloomberg 30-day visible supply rose $1.392 billion to $18.541 billion on Monday, above the 12-month average of $14.059 billion.

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