Bond Market Commentary

Over in bond land, Treasury yields are unchanged before the opening bell Tuesday ahead of today’s July Consumer Price Index (CPI) and federal budget balance data. Meanwhile, a reading of small business optimism increased more-than-expected in July. As of 6:46 AM ET, the yield on the 10-year note is unchanged at 4.28%, while the 30-year bond yield is also unchanged at 4.85%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 3.77%.

Treasury yields were mostly unchanged on Monday following President Donald Trump and China agreeing to prolong the U.S.-China tariff reprieve by 90 days, which helped to calm trade tensions. The yield on the 10-year note was unchanged at 4.28%, while the 30-year bond yield was also unchanged at 4.85%. The yield on the two-year note increased one basis point (0.01%) to 3.77%.

On the data front, the National Federation of Independent Business’s gauge of small business optimism increased to 100.3 in July from the prior month’s 98.6. The headline CPI for July is expected to show price increases of 0.2% month-over-month (MOM) and 2.8% year-over-year (YOY), versus the prior month’s increases of 0.3% and 2.7%, respectively. Meanwhile, core CPI is expected to show price increases of 0.3% MOM and 3.0% YOY, versus the prior month’s increases of 0.2% and 2.9%, respectively. Data on July’s average hourly and weekly earnings is also scheduled for release. The U.S. federal budget balance for July is expected to show a deficit of $239.2 billion versus the prior month’s surplus of $27.0 billion.

In the auction space, the U.S. Treasury is set to issue $85 billion in six-week bills.

In the central bank space, Federal Reserve (Fed) Bank of Richmond President Tom Barkin and Kansas City Fed President Jeffrey Schmid are scheduled to speak today.

The Bloomberg 30-day visible supply rose $4.170 billion to $16.110 billion on Monday, above the 12-month average of $14.070 billion.

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