Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Monday ahead of today’s manufacturing data from the Federal Reserve (Fed) Bank of New York, along with a measure of homebuilder sentiment. Investors are also awaiting this week's release of the minutes from the July 29 Federal Open Market Committee (FOMC) meeting and S&P Global's preliminary August Purchasing Managers' Indexes (PMIs), due on Wednesday and Friday, respectively. As of 6:57 AM ET, the yield on the 10-year note is unchanged at 4.69%, while the 30-year bond yield is also unchanged at 5.26%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 4.16%. 

Treasury yields were higher on Friday as retail sales unexpectedly fell in July, decreasing by 0.6% month-over-month. The University of Michigan’s preliminary consumer sentiment index for August declined more than anticipated, while inflation expectations rose to 4.3% for the one-year outlook and remained steady at 3.3% for the five-to-ten-year horizon. The yield on the 10-year note was up five basis points (0.05%) to 4.69%, while the 30-year bond yield also rose five basis points (0.05%) to 5.26%. The yield on the two-year note increased three basis points (0.03%) to 4.17%.

On the data front, the New York Fed will release their Empire State Manufacturing Survey for August, with the headline general business conditions index expected to fall to 10.0 from the prior month’s 15.6. The National Association of Home Builders’ Housing Market Index is forecasted to decline to 33 for August from the prior month’s 34.

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 13, the average 30-year fixed mortgage rate was down two basis points (0.02%) to 6.67%, versus 6.58% a year ago. The 15-year fixed mortgage rate decreased five basis points (0.05%) to 5.96%, versus 5.71% a year ago.

The Bloomberg 30-day visible supply rose $2.156 billion to $20.625 billion on Friday, above the 12-month average of $14.295 billion.

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