Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Wednesday ahead of today’s economic releases, including November’s ADP employment change report and the Institute for Supply Management’s (ISM’s) November services purchasing managers’ index (PMI). September’s import price and industrial production data, both delayed by the government shutdown, are also set for release. As of 6:56 AM ET, the yield on the 10-year note is decreasing two basis points (0.02%) to 4.07%, while the 30-year bond yield is also falling two basis points (0.02%) to 4.73%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 3.49%.

Treasury yields were mixed on Tuesday as Federal Reserve Vice Chair for Supervision Michelle Bowman testified before the House Financial Services Committee. She emphasized that U.S. banks remain stable and resilient, backed by strong capital ratios and ample liquidity, and later noted this positions them to effectively support sustained economic growth. The yield on the 10-year note was unchanged at 4.09%, while the 30-year bond yield rose one basis point (0.01%) to 4.75%. The yield on the two-year note decreased two basis points (0.02%) to 3.51%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications decreased by 1.4% for the week ending November 28 versus the prior week’s increase of 0.2%. The ADP employment change report for November is expected to show private nonfarm job gains of 10,000, versus the prior month’s 42,000. The September Import Price Index is projected to have increased 0.1% month-over-month (MOM) and 0.4% year-over-year (YOY), versus the prior month’s increase of 0.3% and little change, respectively. The Export Price Index is forecasted to have decreased by 0.1% MOM, versus the prior month’s increase of 0.3%. Industrial production is forecasted to have increased 0.1% MOM in September, versus the prior month’s revised decreased of 0.1%, while capacity utilization is projected to have fallen to 77.2% from the prior month’s revised 75.8%. S&P Global’s finalized services PMI for November is expected to come in at 55.0, unchanged from the initial reading. The ISM’s November services PMI and the prices paid component are expected to register 52.0 and 68.0, respectively, versus the prior month’s 52.4 and 70.0, respectively. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 2.0 million barrels for the week ending November 28, versus the prior week’s increase of 2.8 million barrels.

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills.

The Bloomberg 30-day visible supply rose $618 million to $18.653 billion on Tuesday, above the 12-month average of $13.903 billion.

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