Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Wednesday as markets hope for a resolution to the Iran War following reports that the U.S. had sent Iran a proposed peace deal. Investors are looking forward to today’s releases of the fourth-quarter current account balance and February Import Price Index data. As of 7:01 AM ET, the yield on the 10-year note is decreasing four basis points (0.04%) to 4.32%, while the 30-year bond yield is also falling four basis points (0.04%) to 4.89%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 3.86%.

Treasury yields were higher on Tuesday as S&P Global’s preliminary manufacturing purchasing managers’ index (PMI) for March unexpectedly rose to 52.4, while the services and composite PMIs declined to 51.1 and 51.4, respectively. The yield on the 10-year note was up two basis points (0.02%) to 4.36%, while the 30-year bond yield also rose two basis points (0.02%) to 4.93%. The yield on the two-year note increased four basis points (0.04%) to 3.89%.

On the data front, MBA mortgage applications for the week ending March 20 fell 10.5%. Import prices for February are forecasted to show increases of 0.6% month over month (MOM) and 0.4% year over year (YOY), compared to the prior month’s increase of 0.2% and decrease of 0.1%, respectively. Meanwhile, export prices are expected to show an increase of 0.6% MOM, similar to the prior month’s reading. The U.S. current account balance for the fourth quarter is expected to register a deficit of $208.5 billion versus the prior quarter’s deficit of $226.4 billion. The Department of Energy’s measure of crude oil inventories for the week ending March 20 is expected to show a decrease of 1.25 million barrels versus the prior week’s increase of 6.16 million barrels.

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills, $28 billion in two-year floating rate notes, and $70 billion in five-year notes.

In the central bank space, Federal Reserve Governor Stephen Miran is scheduled to speak today.

The Bloomberg 30-day visible supply rose $458 million to $19.554 billion on Tuesday, above the 12-month average of $14.089 billion.

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