Bond Market Commentary

Over in bond land, Treasury yields are mixed before the opening bell Thursday as markets await developments in the reopening of the Strait of Hormuz following President Donald Trump’s early signing of the 60-day ceasefire extension with Iran. Meanwhile, investors are also looking forward to today’s economic releases, including the latest unemployment claims and leading index data. Next week’s spotlight will be on preliminary June purchasing manager’s indexes and May's personal income, personal spending, and Personal Consumption Expenditures Deflator. As of 6:55 AM ET, the yield on the 10-year note is decreasing three basis points (0.03%) to 4.46%, while the 30-year bond yield is falling five basis points (0.05%) to 4.88%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 4.20%. 

Treasury yields were mixed on Wednesday as the Federal Open Market Committee (FOMC) kept its benchmark interest rate unchanged at 3.50% to 3.75%, though nine out of 19 officials now expect at least one rate hike this year. In his post-meeting press conference, Federal Reserve (Fed) Chair Kevin Warsh noted that the economy remains resilient, with steady job growth despite ongoing uncertainty, while the updated Summary of Economic Projections pointed to higher inflation and slightly slower growth. May’s retail sales and pending home sales both registered greater-than-expected increases of 0.9% and 3.8% month-over-month, respectively. The yield on the 10-year note was up five basis points (0.05%) to 4.49%, while the 30-year bond yield fell one basis point (0.01%) to 4.93%. The yield on the two-year note increased 13 basis points (0.13%) to 4.18%. As of end of day Wednesday (June 17), futures markets are pricing in two basis points (0.02%) worth of rate hikes at the Fed’s upcoming June meeting, with a cumulative 38 basis points (0.38%) worth of rate hikes by year-end 2026.

On the data front, initial jobless claims for the week ending June 13 are expected to come in at 225,000, lower than the prior week’s 229,000, while continuing claims are expected to come in at 1.79 million for the week ending June 6, slightly down from the prior week’s 1.80 million. The Philadelphia Fed will release their June Manufacturing Business Outlook Survey, with the diffusion index of current general activity forecasted to significantly rise to 10.0 from the prior month’s negative 0.4. The leading index for May is forecasted to show an increase of 0.1%, similar to the prior month’s increase.

In the auction space, the U.S. Treasury is set to issue $70 billion in four-week bills, $75 billion in eight-week bills, and $24 billion in five-year Treasury Inflation-Protected Securities.

The Bloomberg 30-day visible supply fell $2.887 million to $13.615 billion on Wednesday, above the 12-month average of $13.837 billion.

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