Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Monday ahead of today’s Institute for Supply Management (ISM) services purchasing managers’ index (PMI) for March and as markets continue assessing developments in the Iran war. While markets were closed on Friday, the March jobs report showed nonfarm payrolls rising more than forecasted following downward revisions for the prior month. Meanwhile, the unemployment rate fell to 4.3% as the labor force participation rate slipped to 61.9%. The finalized March services PMI from S&P Global was unexpectedly revised downward to 49.8, just into contractionary territory. Later this week, investors will look forward to February’s personal income, personal spending, Personal Consumption Expenditures (PCE) deflator, all on Thursday, and March’s Consumer Price Index data on Friday. As of 6:55 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.34%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.90%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up six basis points (0.06%) to 3.85%.

Treasury yields were lower on Thursday as the Challenger Report showed March job cuts rising less than forecasted from the prior month. Weekly initial jobless claims unexpectedly fell, while continuing claims for the week prior rose. The February trade deficit widened less than expected following unexpected increases for both imports and exports. The yield on the 10-year note was down one basis point (0.01%) to 4.31%, while the 30-year bond yield also fell one basis point (0.01%) to 4.89%. The yield on the two-year note decreased one basis point (0.01%) to 3.79%.

On the data front, the ISM’s March services PMI and the prices paid component are expected to register 54.9 and 67.0, respectively, versus the prior month’s 56.1 and 63.0, respectively.

In the auction space, the U.S. Treasury is set to issue $89 billion in 13-week bills and $77 billion in 26-week bills.

Mortgage rates were higher in the latest week. For the week ending April 2, the average 30-year fixed mortgage rate was up eight basis points (0.08%) to 6.46%, versus 6.64% a year ago. The 15-year fixed mortgage rate increased two basis points (0.02%) to 5.77%, versus 5.82% a year ago.

The Bloomberg 30-day visible supply fell $1.079 billion to $11.926 billion on Thursday, below the 12-month average of $14.132 billion.

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