Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Wednesday ahead of today’s release of the Federal Reserve’s (Fed’s) Beige Book survey of regional economic conditions, along with March import and export price data. As of 6:57 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.26%, while the 30-year bond yield is also increasing one basis point (0.01%) to 4.87%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 3.76%. 

Treasury yields were lower on Tuesday as both the headline and core Producer Price Index (PPI) for March posted cooler than expected monthly gains of 0.5% and 0.1% month-over-month (MOM), respectively, following downwardly revised increases in the prior month. On a year over year (YOY) basis, headline and core PPI rose 4.0% and 3.8%, respectively. The yield on the 10-year note was down four basis points (0.04%) to 4.25%, while the 30-year bond yield also fell four basis points (0.04%) to 4.86%. The yield on the two-year note decreased three basis points (0.03%) to 3.74%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications increased by 1.8% for the week ending April 10 versus the prior week’s decrease of 0.8%. The New York Fed will release April’s Empire State Manufacturing Survey, with the headline general business conditions index forecasted to rise slightly to 0.0 from the prior month’s -0.2. The March Import Price Index is projected to have increased 2.3% MOM and 4.4% YOY, accelerating from the prior month’s 1.3% increase on both measures, while the Export Price Index is forecasted to have increased 1.5% MOM and 4.8% YOY, versus the prior month’s increases of 1.5% and 3.5%, respectively. The National Association of Home Builders’ Housing Market Index is forecasted to decrease to 37 for April from the prior month’s 38. Meanwhile, the Department of Energy’s measure of crude oil inventories is expected to have increased by 1.90 million barrels for the week ending April 10 versus the prior week’s increase of 3.08 million barrels.

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

In the central bank space, Fed Vice Chair for Supervision Michelle Bowman, Fed Governor Michael Barr, and Cleveland Fed President Beth Hammack are scheduled to speak today.

The Bloomberg 30-day visible supply fell $107 million to $19.948 billion on Tuesday, above the 12-month average of $14.109 billion.

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