Bond Market Commentary

Over in bond land, Treasury yields are little changed before the opening bell Wednesday ahead of today’s Producer Price Index (PPI) for August and July’s finalized wholesale inventories data. As of 6:45 AM ET, the yield on the 10-year note is unchanged at 4.09%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.74%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 3.55%.

Treasury yields were higher on Tuesday as the U.S. Bureau of Labor Statistics' preliminary annual benchmark revision for data through March 2025 showed total nonfarm employment being revised down by 911,000 jobs, more than expected and roughly halving job gains. The yield on the 10-year note was up five basis points (0.05%) to 4.09%, while the 30-year bond yield rose four basis points (0.04%) to 4.73%. The yield on the two-year note increased seven basis points (0.07%) to 3.56%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications increased by 9.2% for the week ending September 5 versus the prior week’s decrease of 1.2%. The headline PPI for August is expected to show price increases of 0.3% month-over-month (MOM) and 3.3% year-over-year (YOY) versus the prior month’s increases of 0.9% and 3.3%, respectively. The core PPI, which excludes volatile components like food and energy, is expected to show price increases of 0.3% MOM and 3.5% YOY versus the prior month’s increases of 0.9% and 3.7%, respectively. The finalized July reading of wholesale inventories is expected to show an increase of 0.2% MOM, similar to the prior reading, while July’s wholesale trade sales is expected to come in at 0.2% MOM versus the prior month’s increase of 0.3%. Meanwhile, the Department of Energy’s measure of crude oil inventories is expected to have decreased by 1.4 million barrels for the week ending September 5 versus the prior week’s increase of 2.4 million barrels.

In the auction space, the U.S. Treasury is set to issue $65 billion in 17-week bills and $39 billion in 10-year notes.

The Bloomberg 30-day visible supply rose $3.379 billion to $13.921 billion on Tuesday, above the 12-month average of $13.867 billion.

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