Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Monday ahead of today’s June services purchasing managers’ index (PMI) data release from the Institute for Supply Management (ISM) and a finalized reading from S&P Global. Investors will also be looking forward to this week’s release of the May trade balance and the Federal Open Market Committee (FOMC) meeting minutes, scheduled for Tuesday and Wednesday, respectively.  As of 6:57 AM ET, the yield on the 10-year note is decreasing two basis points (0.02%) to 4.46%, while the 30-year bond yield is falling one basis point (0.01%) to 4.98%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 4.11%. 

Treasury yields were mixed on Thursday as nonfarm payrolls for June fell short of expectations, rising by just 57,000, while manufacturing payrolls met forecasts with a modest increase of 3,000. Both the unemployment rate and the labor force participation rate edged lower, falling to 4.2% and 61.5%, respectively. Average hourly earnings rose 0.3% month-over-month (MOM) and 3.5% year-over-year (YOY), in line with projections. Meanwhile, both initial jobless claims and continuing claims for the week prior came in lower than projected. May’s factory orders registered smaller-than-expected decline of 1.3% MOM. The yield on the 10-year note was unchanged at 4.48%, while the 30-year bond yield rose two basis points (0.02%) to 4.99%. The yield on the two-year note decreased three basis points (0.03%) to 4.14%.

On the data front, S&P Global’s finalized services and composite PMIs for June are expected to come in at 51.3 and 52.2, respectively, both unchanged from the prior reading. The ISM’s June services PMI and the prices paid component are expected to register 54.0 and 67.5, respectively, versus the prior month’s 54.5 and 71.3, respectively.

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.

In the central bank space, Federal Reserve Governor Christopher Waller is scheduled to speak today.

Mortgage rates were lower in the latest week. For the week ending July 2, the average 30-year fixed mortgage rate was down six basis points (0.06%) to 6.43%, versus 6.67% a year ago. The 15-year fixed mortgage rate decreased five basis points (0.05%) to 5.79%, versus 5.80% a year ago.

None at this time.

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