Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Tuesday as investors react to two oil tankers being struck while transiting the Strait of Hormuz. Investors are also looking forward to August’s manufacturing Purchasing Managers’ Index (PMI) from the Institute for Supply Management (ISM), along with the July Job Openings and Labor Turnover Survey (JOLTS). As of 7:01 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.78%, while the 30-year bond yield is also increasing three basis points (0.03%) to 5.27%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 4.35%. 

Treasury yields were mostly higher on Monday as markets digested Federal Reserve (Fed) Chair Kevin Warsh’s comments at the Jackson Hole Economic Symposium on Friday and assessed strikes by the U.S. and Iran. The yield on the 10-year note was up three basis points (0.03%) to 4.75%, while the 30-year bond yield also rose three basis points (0.03%) to 5.24%. The yield on the two-year note was unchanged at 4.34%.

On the data front, the finalized reading of S&P Global’s manufacturing PMI for August is expected to come in at 53.4, slightly up from the preliminary reading of 53.2. ISM’s manufacturing PMI and prices paid component for August are expected to come in at 55.2 and 70.8, respectively, versus the prior month’s reading of 55.6 and 71.1, respectively. Construction spending is projected to show little change month-over-month in July, versus the prior month’s decrease of 0.1%. The July JOLTS is forecasted to show job openings of 7.313 million, versus the prior month’s 7.359 million. The Dallas Fed will release their Texas Service Sector Outlook Survey for August, with the general business activity index expected to come in at 7.2, up from the prior month’s 6.6. Total vehicle sales are expected to slow to a 16.30 million pace in August from July’s 16.33 million.

In the auction space, the U.S. Treasury is set to issue $85 billion in six-week bills and $52 billion in 52-week bills.

In the central bank space, Fed Governor Michael Barr is scheduled to speak today.

The Bloomberg 30-day visible supply fell $3.810 billion to $23.415 billion on Monday, above the 12-month average of $14.802 billion.

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