Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Friday ahead of today’s economic releases, including preliminary February reading of consumer sentiment from the University of Michigan and December’s consumer credit data. As of 6:54 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.20%, while the 30-year bond yield is also increasing two basis points (0.02%) to 4.86%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up three basis points (0.03%) to 3.48%. 

Treasury yields were lower on Thursday as the December Job Openings and Labor Turnover Survey showed lower-than-projected job openings. Both initial jobless claims and continuing claims rose. The Challenger Report for January showed a sharp rise in announced job cuts, up 117.8% from last year. The yield on the 10-year note was down nine basis points (0.09%) to 4.18%, while the 30-year bond yield fell eight basis points (0.08%) to 4.84%. The yield on the two-year note decreased 10 basis points (0.10%) to 3.45%. As of end of day Thursday (February 5), futures markets are pricing in six basis points (0.06%) worth of rate cuts at the Federal Reserve's upcoming March meeting, with a cumulative 60 basis points (0.60%) worth of rate cuts by year-end 2026 and a cumulative 62 basis points (0.62%) worth of rate cuts by year-end 2027.

On the data front, the University of Michigan’s preliminary February reading of consumer sentiment is forecasted to come in at 55.0, lower than the prior month’s 56.4. The one-year and five- to ten-year inflation expectations for February from the University of Michigan are expected to come in at 4.0% and 3.3%, respectively, similar to the prior month’s readings. Consumer credit is expected to have expanded by $8.0 billion in December, more than the prior month’s increase of $4.2 billion. 

In the central bank space, Federal Reserve Vice Chair Philip Jefferson is scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending February 5, the average 30-year fixed mortgage rate was up one basis point (0.01%) to 6.11%, versus 6.89% a year ago. The 15-year fixed mortgage rate increased one basis point (0.01%) to 5.50%, versus 6.05% a year ago.

The Bloomberg 30-day visible supply fell $1.956 billion to $13.498 billion on Thursday, below the 12-month average of $13.890 billion.

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