Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Tuesday following a Friday evening announcement from a federal appeals court upholding a prior decision that much of President Donald Trump’s widespread use of global tariffs exceeded presidential authority, but left them in effect as appeals take place. Investors are also looking forward to today’s August manufacturing purchasing managers’ index (PMI) data release from the Institute for Supply Management (ISM) and a finalized reading from S&P Global. Later in the week, Friday’s job report for August will be closely watched. As of 6:46 AM ET, the yield on the 10-year note is rising five basis points (0.05%) to 4.28%, while the 30-year bond yield is also increasing five basis points (0.05%) to 4.98%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up three basis points (0.03%) to 3.65%.

Treasury yields were mixed on Friday as the core Personal Consumption Expenditures Deflator, the Federal Reserve’s (Fed’s) preferred gauge of inflation, rose 0.3% month-over-month (MOM) and 2.9% year-over-year (YOY) in July, both in line with expectations. Both personal income and personal spending for July posted increases of 0.4% and 0.5% MOM, respectively. The advance goods trade deficit widened more than expected in July, while the preliminary reading of wholesale inventories for July increased more than projected. The yield on the 10-year note was up three basis points (0.03%) to 4.23%, while the 30-year bond yield rose five basis points (0.05%) to 4.93%. The yield on the two-year note decreased one basis point (0.01%) to 3.62%.

On the data front, the finalized reading of S&P Global’s manufacturing PMI for August is expected to remain unchanged from the preliminary reading of 53.3. The Institute for Supply Management’s manufacturing PMI and prices paid component for August are expected to come in at 49.0 and 65.0, respectively, versus the prior month’s 48.0 and 64.8, respectively. Construction spending is projected to have decreased 0.1% MOM in July, versus the prior month’s decrease of 0.4%.

In the auction space, the U.S. Treasury is set to issue $82 billion in 13-week bills, $73 billion in 26-week bills, $50 billion in 52-week bills, and $85 billion in six-week bills.

None at this time.

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