Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Tuesday ahead of today’s preliminary June Purchasing Managers’ Indexes (PMIs), along with economic measures from the Richmond and Philadelphia Federal Reserve (Fed) banks. As of 6:55 AM ET, the yield on the 10-year note is decreasing three basis points (0.03%) to 4.48%, while the 30-year bond yield is falling one basis point (0.01%) to 4.94%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down four basis points (0.04%) to 4.19%. 

Treasury yields were higher on Monday following progress in negotiations between the United States and Iran, after the U.S. temporarily lifted major sanctions on Iran. The yield on the 10-year note was up six basis points (0.06%) to 4.51%, while the 30-year bond yield rose five basis points (0.05%) to 4.95%. The yield on the two-year note increased five basis points (0.05%) to 4.23%.

On the data front, the Philadelphia Fed’s Nonmanufacturing Business Outlook Survey for June will be released today, with the diffusion index of current general activity forecasted to improve to negative 16.0 from the prior month’s negative 23.6. The preliminary reading of S&P Global’s composite PMI for June is expected to come in at 52.1 versus the prior month’s 51.5, with the manufacturing and services PMIs forecasted at 54.6 and 51.1, respectively, compared to the prior month’s 55.1 and 50.7, respectively. The Richmond Fed’s June Fifth District Survey of Manufacturing Activity will be released today, with the headline composite manufacturing index expected to decline to 8 from the prior month’s 13. The Richmond Fed’s June Fifth District Survey of Non-Manufacturing Activity will also be released today, with the local business conditions index expected to improve to 2 from the prior month’s 0.

In the auction space, the U.S. Treasury is set to issue $65 billion in six-week bills and $69 billion in two-year notes.

The Bloomberg 30-day visible supply rose $838 million to $13.921 billion on Monday, above the 12-month average of $13.851 billion.

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