Bond Market Commentary

Over in bond land, Treasury yields are mixed before the opening bell Wednesday ahead of today’s conclusion of the Federal Reserve’s May policy meeting and following press conference from Chair Jerome Powell. Investors will also be looking forward to today’s consumer credit data. As of 6:46 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.31%, while the 30-year bond yield is falling one basis point (0.01%) to 4.79%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up three basis points (0.03%) to 3.81%.

Treasury yields were lower on Tuesday as the U.S. trade deficit widened more than expected in March, reaching a record $140.5 billion from February’s revised $123.2 billion. The yield on the 10-year note was down five basis points (0.05%) to 4.29%, while the 30-year bond yield fell three basis points (0.03%) to 4.80%. The yield on the two-year note decreased five basis points (0.05%) to 3.78%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications increased by 11.0% for the week ending May 2 versus the prior week’s decrease of 4.2%. The Department of Energy’s measure of crude oil inventories is expected to show a decrease of 1.86 million barrels for the week ending May 2, compared to the prior week’s decrease of 2.70 million barrels. Consumer credit is expected to have expanded by $9.39 billion in March versus the prior month’s decline of $810 million.

In the auction space, the U.S. Treasury is set to issue $60 billion in 17-week bills.

The Bloomberg 30-day visible supply rose $2.735 billion to $14.280 billion on Tuesday, compared to the 12-month average of $12.990 billion.

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