Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Monday as markets await Wednesday’s preliminary September purchasing managers’ indexes (PMIs) from S&P Global and Thursday’s meeting between U.S. President Donald Trump and Chinese President Xi Jinping. As of 7:00 AM ET, the yield on the 10-year note is decreasing five basis points (0.05%) to 4.95%, while the 30-year bond yield is falling four basis points (0.04%) to 5.29%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 4.72%. 

Treasury yields were higher on Friday as August industrial production was little changed on a month-over-month basis, while capacity utilization remained steady at 76.3%, falling short of expectations for modest increases in both measures. Meanwhile, the Conference Board’s Leading Economic Index unexpectedly decreased 0.1% in August. The yield on the 10-year note was up seven basis points (0.07%) to 5.00%, while the 30-year bond yield rose five basis points (0.05%) to 5.33%. The yield on the two-year note increased eight basis points (0.08%) to 4.74%.

On the data front, the Federal Reserve (Fed) Bank of Chicago’s National Activity Index for August is expected to come in at -0.04, up from the prior month’s -0.08.

In the auction space, the U.S. Treasury is set to issue $92 billion in 13-week bills and $79 billion in 26-week bills.

In the central bank space, Chicago Fed President Austan Goolsbee spoke earlier today, mentioning how there may be economic pain as the Fed gets inflation back to its target.

Mortgage rates were higher in the latest week. For the week ending September 17, the average 30-year fixed mortgage rate was up 19 basis points (0.19%) to 6.95%, versus 6.26% a year ago. The 15-year fixed mortgage rate increased 17 basis points (0.17%) to 6.26%, versus 5.41% a year ago.

The Bloomberg 30-day visible supply rose $1.843 billion to $17.782 billion on Friday, above the 12-month average of $15.170 billion.

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