Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Tuesday following hopes for a peace deal between the U.S. and Iran despite the U.S. conducting military strikes over the holiday weekend. Meanwhile, investors are awaiting today’s March home price data and May consumer confidence release. Markets are also looking forward to April’s personal income, personal spending, and Personal Consumption Expenditures (PCE) Deflator data, out on Thursday. As of 7:01 AM ET, the yield on the 10-year note is decreasing eight basis points (0.08%) to 4.48%, while the 30-year bond yield is falling five basis points (0.05%) to 5.01%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down seven basis points (0.07%) to 4.05%.

Treasury yields were mixed on Friday as the finalized reading of May consumer sentiment from the University of Michigan was revised lower to 44.8, alongside upwardly revised one- and 5–10-year inflation expectations of 4.8% and 3.9%, respectively. The yield on the 10-year note was down one basis point (0.01%) to 4.56%, while the 30-year bond yield fell three basis points (0.03%) to 5.06%. The yield on the two-year note increased four basis points (0.04%) to 4.12%.

On the data front, the Federal Reserve (Fed) Bank of Chicago’s National Activity Index for April is expected to come in at negative 0.03, up from the prior month’s negative 0.20. The Philadelphia Fed’s Nonmanufacturing Business Outlook Survey for May will be released today, with the diffusion index of current general activity forecasted to improve to negative 13.0 from the prior month’s negative 16.5. The Federal Housing Finance Agency’s House Price Index is expected to show an increase of 0.1% month-over-month (MOM) in March, compared to the prior month’s little change. The S&P CoreLogic Case-Shiller 20-City Home Price Index for March is expected to register a decrease of 0.10% MOM and an increase of 0.90% year-over-year , versus the prior month’s decrease of 0.05% and increase of 0.90%, respectively. The Conference Board’s reading of May consumer confidence is projected to come in at 92.0 versus the prior month’s 92.8. The Dallas Fed’s Texas Manufacturing Outlook Survey for May will be released, with the general business activity index forecasted to come in at 0.0 from the prior month’s negative 2.3.

In the auction space, the U.S. Treasury is set to issue $89 billion in 13-week bills, $77 billion in 26-week bills, $85 billion in six-week bills, and $69 billion in two-year notes.

In the central bank space, Minneapolis Fed President Neel Kashkari is scheduled to speak today.

None at this time.

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