Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Wednesday ahead of today’s services purchasing managers’ index (PMI) data from the Institute for Supply Management (ISM), along with employment data from ADP. As of 6:59 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.28%, while the 30-year bond yield is also increasing one basis point (0.01%) to 4.90%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 3.58%.

Treasury yields were mostly lower on Tuesday as the partial government shutdown ended, with most of the government funded through the end of September, though funding for the Department of Homeland Security will lapse next Friday (February 13). The yield on the 10-year note was down one basis point (0.01%) to 4.27%, while the 30-year bond yield fell two basis points (0.02%) to 4.89%. The yield on the two-year note was unchanged at 3.57%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications decreased by 8.9% for the week ending January 30 versus the prior week’s decrease of 8.5%. The ADP employment change report for January is expected to show private nonfarm job gains of 45,000, versus the prior month’s 41,000. The finalized S&P Global services PMI for January is expected to remain unchanged from the prior reading of 52.5, while the composite PMI is expected to come in at 52.9 versus the prior reading of 52.8. The ISM’s January services PMI and the prices paid component are expected to register 53.5 and 65.0, respectively, versus the prior month’s revised 53.8 and 65.1, respectively. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 639,000 barrels for the week ending January 30 versus the prior week’s decrease of 2.3 million barrels.

In the central bank space, Federal Reserve Governor Lisa Cook is scheduled to speak today.

The Bloomberg 30-day visible supply rose $1.663 billion to $15.051 billion on Tuesday, above the 12-month average of $13.864 billion.

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