Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Wednesday following President Donald Trump saying the ceasefire with Iran is over. Investors are looking forward to today’s release of the June 17 Federal Open Market Committee meeting minutes, along with May consumer credit and finalized wholesale inventory data. As of 7:06 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.57%, while the 30-year bond yield is increasing one basis point (0.01%) to 5.07%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up three basis points (0.03%) to 4.21%. 

Treasury yields were higher on Tuesday as the U.S. trade deficit widened less than expected in May, following a downward revision to April's deficit, as import growth exceeded forecasts while exports declined less than anticipated. The yield on the 10-year note was up eight basis points (0.08%) to 4.55%, while the 30-year bond yield also rose eight basis points (0.08%) to 5.06%. The yield on the two-year note increased seven basis points (0.07%) to 4.18%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications decreased by 2.2% for the week ending July 3 versus the prior week’s little change. The finalized May reading of wholesale inventories is expected to show an increase of 0.3% month-over-month (MOM), unchanged from the preliminary reading, while May’s wholesale trade sales is expected to come in at 0.8% MOM versus the prior month’s increase of 2.0%. Meanwhile, the Department of Energy’s measure of crude oil inventories is expected to have decreased by 1.9 million barrels for the week ending July 3 versus the prior week’s decrease of 3.8 million barrels. Consumer credit is expected to have expanded by $17.50 billion in May, lower than the prior month’s increase of $20.73 billion.

In the auction space, the U.S. Treasury is set to issue $72 billion in 17-week bills and $39 billion in 10-year notes.

None at this time.

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