Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Friday ahead of today’s preliminary reading of August’s durable goods orders and the finalized reading of September’s consumer sentiment data from the University of Michigan. Investors are also assessing news of discussions between the U.S. and Iran on potentially reopening the Strait of Hormuz. Next week, the highlight will be on key economic releases including the September jobs report and August’s personal income, personal spending, and Personal Consumption Expenditures Deflator (the Federal Reserve’s [Fed’s] preferred gauge of inflation) data. As of 6:55 AM ET, the yield on the 10-year note is decreasing three basis points (0.03%) to 5.17%, while the 30-year bond yield is falling one basis point (0.01%) to 5.47%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 4.89%. 

Treasury yields were higher on Thursday following further hawkish commentary from Fed officials. August new home sales rose more than expected, while both initial jobless claims and continuing claims from the previous week came in lower than expected. The yield on the 10-year note was up nine basis points (0.09%) to 5.20%, while the 30-year bond yield rose eight basis points (0.08%) to 5.48%. The yield on the two-year note increased two basis points (0.02%) to 4.92%. As of end of day Thursday (September 24), futures markets are pricing in 18 basis points (0.18%) worth of rate hikes at the Fed’s upcoming October meeting, with a cumulative 38 basis points (0.38%) worth of rate hikes by year-end 2026 and a cumulative 96 basis points (0.96%) worth of rate hikes by year-end 2027.

On the data front, the preliminary reading of August’s durable goods orders is forecasted to show a decrease of 0.3% month-over-month, compared to the prior month’s increase of 1.1%. The finalized September Survey of Consumers from the University of Michigan is expected to show the consumer sentiment index at 47.5 versus the preliminary reading of 47.8. The survey’s reading of one-year inflation expectations are expected to edge up to 4.7% from the preliminary reading of 4.6%, while 5-10-year inflation expectations are expected to hold steady at 3.4%. The Kansas City Fed will release their Services Survey for September, with the composite index expected to come in at -1 compared to the prior month’s -3.

In the central bank space, Cleveland Fed President Beth Hammack, Kansas City Fed President Jeffrey Schmid, and New York Fed President John Williams are scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending September 24, the average 30-year fixed mortgage rate was up eight basis points (0.08%) to 7.03%, versus 6.30% a year ago. The 15-year fixed mortgage rate increased 16 basis points (0.16%) to 6.42%, versus 5.49% a year ago.

None at this time.

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