Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Wednesday ahead of today’s data releases, including the March manufacturing purchasing managers’ index (PMI) from the Institute for Supply Management (ISM), March ADP Employment Report, and February retail sales. Investors are also continuing to assess developments in the Iran war. As of 7:01 AM ET, the yield on the 10-year note is decreasing four basis points (0.04%) to 4.28%, while the 30-year bond yield is falling three basis points (0.03%) to 4.88%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 3.76%. 

Treasury yields were mostly lower on Tuesday as hopes for a resolution to the Iran war grew. Meanwhile, consumer confidence picked up unexpectedly in March and the February Job Openings and Labor Turnover Survey (JOLTS) showed job openings falling to 6.88 million from an upwardly revised 7.24 million in January. The yield on the 10-year note was down three basis points (0.03%) to 4.32%, while the 30-year bond yield was unchanged at 4.91%. The yield on the two-year note decreased four basis points (0.04%) to 3.79%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications decreased by 10.4% for the week ending March 27 versus the prior week’s decrease of 10.5%. The ADP Employment Report for March is expected to show private nonfarm job gains of 40,000, versus the prior month’s 63,000. Retail sales are expected to have risen 0.5% month-over-month (MOM) in February versus the prior month’s decrease of 0.2%, while retail sales excluding autos are forecasted to have risen 0.3% MOM versus the prior month’s little change. The finalized reading of S&P Global’s manufacturing PMI for March is expected to come in at 52.4, unchanged from the initial reading. ISM’s manufacturing PMI and prices paid component for March are expected to come in at 52.3 and 74.0, respectively, versus the prior month’s reading of 52.4 and 70.5, respectively. Business inventories are expected to show little change MOM in January compared to the prior month’s increase of 0.1%. The Department of Energy’s measure of crude oil inventories is expected to have increased by 2.00 million barrels for the week ending March 27 versus the prior week’s increase of 6.93 million barrels.

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills.

In the central bank space, Federal Reserve (Fed) Governor Michael Barr and St. Louis Fed President Alberto Musalem are scheduled to speak today.

The Bloomberg 30-day visible supply rose $1.796 billion to $12.984 billion on Tuesday, below the 12-month average of $14.147 billion.

This information is obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed by Wells Fargo Advisors. Additional information available by request.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.