Bond Market Commentary

Over in bond land, Treasury yields are mostly higher before the opening bell Tuesday ahead of today’s economic releases, including industrial production, import price, and housing market data for July. As of 7:02 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.74%, while the 30-year bond yield is also increasing two basis points (0.02%) to 5.33%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.18%. 

Treasury yields were higher on Monday as the Federal Reserve (Fed) Bank of New York’s Empire State Manufacturing Survey unexpectedly strengthened in August, with the headline general business conditions index surging to 20.6. Meanwhile, the National Association of Home Builders’ Housing Market Index rose to 35, defying expectations for a decline. The yield on the 10-year note was up three basis points (0.03%) to 4.72%, while the 30-year bond yield rose five basis points (0.05%) to 5.31%. The yield on the two-year note increased one basis point (0.01%) to 4.18%.

On the data front, the New York Fed will release their Business Leaders Survey for August, with the headline business activity index expected to fall to 4.6 from the prior month’s 8.7. Import prices are expected to increase by 0.1% month-over-month (MOM) and 6.7% year-over-year (YOY) in July, versus the prior month’s increases of 0.3% and 7.1%, respectively. Meanwhile, export prices are expected to show little change MOM and increase by 9.7% YOY in July, versus the prior month’s decrease of 0.6% and increase of 10.2%, respectively. Housing starts are expected to have been an annualized 1.345 million in July versus the prior month’s 1.427 million. The preliminary reading of July building permits is expected to come in at an annualized 1.375 million versus the prior month’s 1.374 million. Industrial production is forecasted to have increased 0.3% MOM in July, compared to the prior month’s increase of 0.1%, while capacity utilization is projected to have risen to 76.3% from the prior month’s 76.1%. Pending home sales for July are expected to have registered little change MOM and increased 1.1% YOY, versus the prior month’s decrease of 5.4% and increase of 2.3%, respectively.

In the auction space, the U.S. Treasury is set to issue $95 billion in six-week bills.

The Bloomberg 30-day visible supply rose $676.8 million to $21.302 billion on Monday, above the 12-month average of $14.335 billion.

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