Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Friday ahead of today’s release of the May jobs report and April’s consumer credit data. Next week, investors will be looking towards May inflation data, with the Consumer Price Index and Producer Price Index out Wednesday and Thursday, respectively. As of 6:54 AM ET, the yield on the 10-year note is unchanged at 4.47%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.98%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.04%. 

Treasury yields were lower on Thursday as initial jobless claims picked up and continuing claims for the week prior fell. In other labor market data, finalized first-quarter nonfarm productivity and unit labor costs were revised lower, coming in at 0.3% quarter-over-quarter and 1.8% on an annualized basis, respectively. The yield on the 10-year note was down two basis points (0.02%) to 4.47%, while the 30-year bond yield also fell two basis points (0.02%) to 4.97%. The yield on the two-year note decreased four basis points (0.04%) to 4.04%. As of end of day Thursday (June 4), futures markets are pricing in no change in the policy rate at the Federal Reserve's upcoming June meeting, with a cumulative 17 basis points (0.17%) worth of rate hikes by year-end 2026 and a cumulative 27 basis points (0.27%) worth of rate hikes by year-end 2027.

On the data front, May’s nonfarm payrolls are expected to expand by 88,000 versus the prior month’s 115,000, while manufacturing payrolls are projected to increase by 2,000 compared to the prior month’s decrease of 2,000. Average hourly earnings are projected to rise 0.3% month-over-month and 3.4% year-over-year for May, compared to the prior month’s increases of 0.2% and 3.6%, respectively. Meanwhile, both the unemployment rate and the labor force participation rate are expected to remain unchanged at 4.3% and 61.8%, respectively. Consumer credit is expected to have expanded by $17.67 billion in April, lower than the prior month’s increase of $24.86 billion.

Mortgage rates were lower in the latest week. For the week ending June 4, the average 30-year fixed mortgage rate was down five basis points (0.05%) to 6.48%, versus 6.85% a year ago. The 15-year fixed mortgage rate decreased eight basis points (0.08%) to 5.79%, versus 5.99% a year ago.

The Bloomberg 30-day visible supply fell $6.631 billion to $16.583 billion on Thursday, above the 12-month average of $13.877 billion.

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