Bond Market Commentary

Over in bond land, Treasury yields are mostly lower before the opening bell Friday as investors are looking forward to today’s release of the August jobs report. As of 6:46 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.15%, while the 30-year bond yield is unchanged at 4.85%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 3.58%.

Treasury yields were lower on Thursday as the ADP Employment Change Report showed private nonfarm payroll gains for August coming in lower than expected. In other labor market data, second-quarter nonfarm productivity was revised higher than projected and unit labor costs were revised lower than forecasted, while initial jobless claims picked up and continuing claims fell. Meanwhile, the Institute for Supply Management’s services purchasing managers’ index for August rose further into expansionary territory than projected and the federal budget deficit came in higher than expected for July. The yield on the 10-year note was down six basis points (0.06%) to 4.16%, while the 30-year bond yield fell five basis points (0.05%) to 4.85%. The yield on the two-year note decreased three basis points (0.03%) to 3.59%.

On the data front, August’s nonfarm payrolls are expected to expand by 75,000 versus the prior month’s 73,000, while manufacturing payrolls are projected to fall by 5,000 compared to the prior month’s decrease of 11,000. Average hourly earnings are projected to rise 0.3% month-over-month (MOM) and 3.8% year-over-year (YOY) for August, compared to the prior month’s increases of 0.3% and 3.9%, respectively. Meanwhile, the unemployment rate is expected to tick up to 4.3% in August from the prior month’s 4.2%, while the labor force participation rate is expected to remain steady at 62.2%.

Mortgage rates were lower in the latest week. For the week ending September 4, the average 30-year fixed mortgage rate was down six basis points (0.06%) to 6.50%, versus 6.35% a year ago. The 15-year fixed mortgage rate decreased 9 basis points (0.09%) to 5.60%, versus 5.47% a year ago.

The Bloomberg 30-day visible supply rose $2.372 billion to $15.427 billion on Thursday, above the 12-month average of $13.947 billion.

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