Bond Market Commentary

Over in bond land, Treasury yields are little changed before the opening bell Wednesday ahead of today’s June ADP employment data and June manufacturing purchasing managers’ index (PMI) from the Institute for Supply Management (ISM).  Investors are also looking forward to today’s comments from Federal Reserve Chair Kevin Warsh and other central bank leaders at the European Central Bank’s Forum on Central Banking. As of 7:04 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.46%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.96%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.17%. 

Treasury yields were higher on Tuesday as May’s job openings came in higher than forecasted, while June’s consumer confidence came in below projections. U.S. house prices declined in April, and Market News International’s Chicago PMI for June fell less than forecasted to 56.7. The yield on the 10-year note was up 10 basis points (0.10%) to 4.47%, while the 30-year bond yield rose nine basis points (0.09%) to 4.95%. The yield on the two-year note increased seven basis points (0.07%) to 4.17%.

On the data front, the Challenger Report on job cuts for June showed a decline of 4.5% year-over-year (YOY) compared to prior month’s increase of 3.4%. The Mortgage Banker Association’s gauge of mortgage applications showed little change for the week ending June 26 versus the prior week’s increase of 1.0%. The ADP National Employment Report for June is expected to show private job gains of 120,000, versus the prior month’s 122,000. The finalized reading of S&P Global’s manufacturing PMI for June is expected to come in at 55.7, similar to the preliminary reading. ISM’s manufacturing PMI and prices paid component for June are expected to come in at 53.9 and 77.5, respectively, versus the prior month’s reading of 54.0 and 82.1, respectively. Construction spending is projected to show an increase of 0.1% month-over-month in May, versus the prior month’s 0.4%. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 2.26 million barrels for the week ending June 26 versus the prior week’s decrease of 6.09 million barrels. Total vehicle sales for June are expected to come in at a 16.10 million pace versus the prior month’s 16.08 million.

In the auction space, the U.S. Treasury is set to issue $72 billion in 17-week bills.

The Bloomberg 30-day visible supply fell $161 million to $12.561 billion on Tuesday, below the 12-month average of $13.910 billion.

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