Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Friday following renewed hopes for a ceasefire extension between the U.S. and Iran and ahead of today’s preliminary June reading of consumer sentiment from the University of Michigan. As of 6:58 AM ET, the yield on the 10-year note is unchanged at 4.46%, while the 30-year bond yield is falling one basis point (0.01%) to 4.95%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.06%. 

Treasury yields were lower on Thursday following President Donald Trump announcing that he had called off planned attacks on Iran. The headline Producer Price Index (PPI) for May showed higher-than-expected increases of 1.1% month-over-month (MOM) and 6.5% year-over-year (YOY), while the core PPI registered softer-than-projected increases in May, rising by 0.4% MOM and 4.9% YOY, with both headline and core measures reflecting downward revisions to the prior month’s readings. Both initial jobless claims and continuing claims rose. The Federal Reserve’s measure of household net worth for the first quarter showed a modest increase of $113 billion, following a downwardly revised gain of $1.73 trillion in the prior quarter. The yield on the 10-year note was down nine basis points (0.09%) to 4.46%, while the 30-year bond yield fell seven basis points (0.07%) to 4.96%. The yield on the two-year note decreased eight basis points (0.08%) to 4.06%. As of end of day Thursday (June 11), futures markets are pricing in one basis point (0.01%) worth of rate hikes at the Federal Reserve's upcoming meeting next week, with a cumulative 19 basis points (0.19%) worth of rate hikes by year-end 2026.

On the data front, the University of Michigan’s preliminary June reading of consumer sentiment is forecasted to come in at 46.0, higher than the prior month’s 44.8. The one- and 5-10-year inflation expectations for June from the University of Michigan are expected to come in at 4.9% and 3.8%, respectively, compared to the prior month’s 4.8% and 3.9%, respectively.

Mortgage rates were higher in the latest week. For the week ending June 11, the average 30-year fixed mortgage rate was up four basis points (0.04%) to 6.52%, versus 6.84% a year ago. The 15-year fixed mortgage rate increased five basis points (0.05%) to 5.84%, versus 5.97% a year ago.

The Bloomberg 30-day visible supply fell $4.207 billion to $13.557 billion on Thursday, below the 12-month average of $13.790 billion.

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