Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Monday following a breakdown in U.S.-Canadian trade negotiations and as markets await details on additional U.S. economic measures against Iran. Investors will also be looking forward to comments from Federal Reserve (Fed) Chair Kevin Warsh on Friday at the Jackson Hole Symposium, along with Wednesday’s Personal Consumption Expenditures (PCE) Deflator data, the Fed’s preferred gauge of inflation. As of 6:57 AM ET, the yield on the 10-year note is decreasing two basis points (0.02%) to 4.71%, while the 30-year bond yield is also falling two basis points (0.02%) to 5.25%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 4.23%.

Treasury yields were higher on Friday as the preliminary August readings of S&P Global’s composite and services Purchasing Managers’ Indexes (PMIs) exceeded expectations, rising to 56.8 and 56.0, respectively. In contrast, the manufacturing PMI unexpectedly eased to 53.2. The yield on the 10-year note was up three basis points (0.03%) to 4.73%, while the 30-year bond yield rose two basis points (0.02%) to 5.27%. The yield on the two-year note increased five basis points (0.05%) to 4.24%.

On the data front, the Chicago Fed’s National Activity Index for July is expected to come in at -0.05, down from the prior month’s -0.02.

In the auction space, the U.S. Treasury is set to issue $92 billion in 13-week bills, and $79 billion in 26-week bills.

Mortgage rates were lower in the latest week.
For the week ending August 20, the average 30-year fixed mortgage rate was down two basis points (0.02%) to 6.65%, versus 6.58% a year ago. The 15-year fixed mortgage rate decreased one basis point (0.01%) to 5.95%, versus 5.69% a year ago.

The Bloomberg 30-day visible supply fell $1.135 billion to $22.103 billion on Friday, compared to the 12-month average of $14.495 billion.

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