Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Friday ahead of today’s comments from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Economic Symposium. Investors are also looking forward to today’s finalized August reading of consumer sentiment from the University of Michigan. As of 6:56 AM ET, the yield on the 10-year note is unchanged at 4.68%, while the 30-year bond yield is increasing one basis point (0.01%) to 5.20%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.23%. 

Treasury yields were higher on Thursday as the advance goods trade balance for July showed the deficit widening more than projected, while the preliminary reading of wholesale inventories for July increased more than projected. Both Initial jobless claims and continuing claims fell. The yield on the 10-year note was up three basis points (0.03%) to 4.68%, while the 30-year bond yield rose two basis points (0.02%) to 5.19%. The yield on the two-year note increased two basis points (0.02%) to 4.23%. As of end of day Thursday (August 27), futures markets are pricing in nine basis points (0.09%) worth of rate hikes at the Federal Reserve's upcoming September meeting, with a cumulative 27 basis points (0.27%) worth of rate hikes by year-end 2026 and a cumulative 29 basis points (0.29%) worth of rate hikes by year-end 2027.

On the data front, the Market News International Chicago purchasing managers’ index is expected to come in at 57.9 for August versus the prior month’s 57.6. The finalized August reading of consumer sentiment from the University of Michigan is expected to come in at 51.0, unchanged from the preliminary estimate, while one-year inflation expectations are projected to be revised higher to 4.4%. Meanwhile, 5-10 year inflation expectations are expected to remain unchanged at 3.3%. The Kansas City Fed will release their Services Survey for August, with the composite index expected to come in at 10, down from the prior month’s 14.

In the central bank space, Fed Chair Kevin Warsh, Chicago Fed President Austan Goolsbee, and Cleveland Fed President Beth Hammack are scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending August 27, the average 30-year fixed mortgage rate was up one basis point (0.01%) to 6.66%, versus 6.56% a year ago. The 15-year fixed mortgage rate increased three basis points (0.03%) to 5.98%, versus 5.69% a year ago.

The Bloomberg 30-day visible supply rose $2.907 billion to $27.085 billion on Thursday, a 12-month high, compared to the 12-month average of $14.686 billion.

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