Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Monday as markets react to President Donald Trump’s announcement that the U.S. will blockade the Strait of Hormuz following a breakdown in peace negotiations with Iran. Investors are looking forward to today’s existing home sales data for March, along with tomorrow’s March’s Producer Price Index and small business optimism. As of 6:57 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.33%, while the 30-year bond yield is increasing two basis points (0.02%) to 4.93%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 3.81%.

Treasury yields were higher on Friday as the headline Consumer Price Index (CPI) for March accelerated to 0.9% month-over-month (MOM), in line with expectations, while the year-over-year (YOY) rate came in slightly below forecasts at 3.3%. The core CPI (which excludes food and energy) came in softer-than-anticipated, rising 0.2% MOM and 2.6% YOY in March. The University of Michigan’s preliminary consumer sentiment index for April fell more than anticipated to 47.6, while inflation expectations for the one-year outlook and the 5-to-10-year horizon edged up to 4.8% and 3.4%, respectively. The yield on the 10-year note was up four basis points (0.04%) to 4.32%, while the 30-year bond yield rose three basis points (0.03%) to 4.91%. The yield on the two-year note increased three basis points (0.03%) to 3.80%.

On the data front, existing home sales are forecasted to have been at an annualized 4.05 million pace in March, versus the prior month’s 4.09 million pace, corresponding to a decrease of 0.8% versus the prior month’s increase of 1.7%.

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.

In the central bank space, Federal Reserve Governor Stephen Miran is scheduled to speak today.

Mortgage rates were lower in the latest week. For the week ending April 9, the average 30-year fixed mortgage rate was down nine basis points (0.09%) to 6.37%, versus 6.62% a year ago. The 15-year fixed mortgage rate decreased three basis points (0.03%) to 5.74%, versus 5.82% a year ago.

The Bloomberg 30-day visible supply fell $443 million to $13.562 billion on Friday, below the 12-month average of $14.090 billion.

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