Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Thursday ahead of today’s economic releases, including data on initial and continuing jobless claims. As of 6:47 AM ET, the yield on the 10-year note is decreasing four basis points (0.04%) to 4.05%, while the 30-year bond yield is also falling four basis points (0.04%) to 4.65%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 3.52%.

Treasury yields were higher on Wednesday as the Federal Open Market Committee (FOMC) in an 11–1 vote cut the federal funds rate by 25 basis points (0.25%), lowering the target range to 4.00%–4.25%. In his post-meeting press conference, Federal Reserve (Fed) Chair Jerome Powell pointed to weakness in the labor market, saying “labor demand has softened, and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant.” The updated Summary of Economic Projections showed a median forecast of two further cuts this year, but then just one more in 2026. Meanwhile, both housing starts and preliminary building permits data showed slowing activity in August. The yield on the 10-year note was up six basis points (0.06%) to 4.09%, while the 30-year bond yield rose four basis points (0.04%) to 4.69%. The yield on the two-year note increased five basis points (0.05%) to 3.55%.

On the data front, initial jobless claims for the week ending September 13 are expected to come in at 240,000, lower than the prior week’s 263,000, while continuing claims are expected to come in at 1.95 million for the week ending September 6, slightly up from the prior week’s 1.94 million. The Federal Reserve Bank of Philadelphia will release their September Manufacturing Business Outlook Survey, with the diffusion index of current general activity forecasted to rise to 1.7 from the prior month’s negative 0.3. The Leading Index for August is forecasted to show a decline of 0.2%, versus the prior month’s decrease of 0.1%.

In the auction space, the U.S. Treasury is set to issue $100 billion in four-week bills, $85 billion in eight-week bills, and $19 billion in 10-year Treasury Inflation-Protected Securities.

The Bloomberg 30-day visible supply fell $1.164 billion to $15.415 billion on Wednesday, above the 12-month average of $13.848 billion.

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