Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Thursday ahead of today’s trade balance and unemployment claims data. As of 6:55 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.14%, while the 30-year bond yield is also falling one basis point (0.01%) to 4.78%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 3.53%.

Treasury yields were lower on Wednesday following the Federal Reserve (Fed) cutting the federal funds rate by 25 basis points (0.25%) to a target range to 3.50%–3.75%. Fed Chair Jerome Powell said, “conditions in the labor market appear to be gradually cooling, and inflation remains somewhat elevated”. Meanwhile, the federal budget deficit came in slightly lower-than-expected for November. The yield on the 10-year note was down four basis points (0.04%) to 4.15%, while the 30-year bond yield fell two basis points (0.02%) to 4.79%. The yield on the two-year note decreased seven basis points (0.07%) to 3.54%.

On the data front, initial jobless claims for the week ending December 6 are expected to come in at 220,000, higher than the prior week’s 191,000, while continuing claims are expected to remain stable at 1.94 million for the week ending November 29. The U.S. trade deficit is expected to widen in September to $63.1 billion from the prior month’s $59.6 billion. The finalized September reading of wholesale inventories is expected to show an increase of 0.1% month-over-month (MOM), while wholesale trade sales are expected to come in at 0.4% MOM versus the prior month’s increase of 0.1%.

In the auction space, the U.S. Treasury is set to issue $85 billion in four-week bills, $80 billion in eight-week bills, and $22 billion in 30-year bonds.

The Bloomberg 30-day visible supply fell $2.391 billion to $10.852 billion on Wednesday, below the 12-month average of $13.906 billion.

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