Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Tuesday ahead of today’s economic releases, including May’s existing home sales, April’s trade balance, and the finalized reading of April wholesale inventories. Meanwhile, small business optimism unexpectedly decreased in May to the lowest level since 2024. As of 6:53 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.55%, while the 30-year bond yield is also falling one basis point (0.01%) to 5.03%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 4.14%. 

Treasury yields were higher on Monday as the Federal Reserve (Fed) Bank of New York’s May 2026 Survey of Consumer Expectations showed a smaller-than-expected increase in one-year-ahead inflation expectations, with the measure coming in at 3.46%, down from 3.64% in the previous month. The yield on the 10-year note was up three basis points (0.03%) to 4.56%, while the 30-year bond yield rose four basis points (0.04%) to 5.04%. The yield on the two-year note increased one basis point (0.01%) to 4.16%.

On the data front, the National Federation of Independent Business’s gauge of small business optimism decreased to 95.3 in May from the prior month’s 95.9. The U.S. trade deficit is expected to contract in April to $56.1 billion from the prior month’s $60.3 billion, with exports and imports projected to show increases of 2.4% and 1.6% month-over-month (MOM), respectively, versus the prior month’s increases of 2.0% and 2.3% MOM, respectively. Existing home sales are forecasted to have been at an annualized 4.07 million pace in May versus the prior month’s 4.02 million pace, corresponding to an increase of 1.1% MOM versus the prior month’s increase of 0.2%. The finalized April reading of wholesale inventories is expected to be revised upward to a 0.6% MOM increase, compared to the preliminary reading of 0.5%, while April’s wholesale trade sales is expected to come in at 1.2% MOM versus the prior month’s increase of 2.8%.

In the auction space, the U.S. Treasury is set to issue $65 billion in six-week bills, $50 billion in 52-week bills, and $58 billion in three-year notes.

The Bloomberg 30-day visible supply rose $2.409 billion to $18.114 billion on Monday, above the 12-month average of $13.799 billion.

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