Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Friday ahead of remarks from Federal Reserve (Fed) Governor Stephen Miran and San Francisco Fed President Mary Daly, both scheduled to speak later today. Next week, investors will be closely watching key data releases, including September’s Purchasing Managers’ Index (PMI), the third estimate of second-quarter gross domestic product, and the Personal Consumption Expenditures (PCE) Deflator. As of 6:47 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.13%, while the 30-year bond yield is increasing two basis points (0.02%) to 4.74%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 3.58%.

Treasury yields were higher on Thursday as both initial and continuing jobless claims fell. The leading index posted a sharper-than-anticipated decline in August. Meanwhile, the Philadelphia Fed’s Manufacturing Business Outlook Survey showed the diffusion index for current general activity significantly rising to 23.2 in September. The yield on the 10-year note was up one basis point (0.01%) to 4.10%, while the 30-year bond yield rose three basis points (0.03%) to 4.72%. The yield on the two-year note increased one basis point (0.01%) to 3.56%. As of end of day Thursday (September 18), futures markets are pricing in 23 basis points (0.23%) worth of rate cuts at the Federal Reserve's upcoming October meeting, with a cumulative 45 basis points (0.45%) worth of rate cuts by year-end 2025 and a cumulative 114 basis points (1.14%) worth of rate cuts by year-end 2026.

Mortgage rates were lower in the latest week. For the week ending September 18, the average 30-year fixed mortgage rate was down nine basis points (0.09%) to 6.26%, versus 6.09% a year ago. The 15-year fixed mortgage rate decreased nine basis points (0.09%) to 5.41%, versus 5.15% a year ago.

The Bloomberg 30-day visible supply fell $964 million to $14.451 billion on Thursday, above the 12-month average of $13.841 billion.

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