Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Thursday ahead of today’s release of the preliminary reading of May’s purchasing managers’ indexes (PMI), along with fresh unemployment claims and housing starts data. As of 6:54 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.62%, while the 30-year bond yield is increasing two basis points (0.02%) to 5.14%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up four basis points (0.04%) to 4.10%. 

Treasury yields were lower on Wednesday following market optimism over efforts to end the Iran war. Meanwhile, the Federal Reserve’s (Fed’s) April 29 Federal Open Market Committee meeting minutes showed a majority believing that a future interest rate hike may be necessary to combat inflation if it remains elevated. The yield on the 10-year note was down eight basis points (0.08%) to 4.59%, while the 30-year bond yield fell six basis points (0.06%) to 5.12%. The yield on the two-year note decreased six basis points (0.06%) to 4.06%.

On the data front, initial jobless claims for the week ending May 16 are expected to come in at 210,000, lower than the prior week’s 211,000, while continuing claims are expected to come in at 1.79 million for the week ending May 9, slightly up from the prior week’s 1.78 million. The Philadelphia Fed will release their May Manufacturing Business Outlook Survey, with the diffusion index of current general activity forecasted to fall to 17.8 from the prior month’s 26.7. Housing starts are expected to have been an annualized 1.410 million in April versus the prior month’s 1.502 million, corresponding to a month-over-month (MOM) decrease of 5.3% versus the prior month’s increase of 10.8%. The preliminary reading of April building permits is expected to come in at an annualized 1.384 million versus the prior month’s 1.363 million, corresponding to a MOM increase of 2.5% versus the prior month’s decline of 11.4%. The preliminary reading of S&P Global’s composite PMI for May is expected to come in at 51.8 versus the prior month’s 51.7, with the manufacturing and services PMIs forecasted at 53.8 and 51.2, respectively, compared to the prior month’s 54.5 and 51.0, respectively. The Kansas City Fed will release their Manufacturing Survey for May, with the composite index expected to come in at 9.0, down from the prior month’s 10.0.

In the auction space, the U.S. Treasury is set to issue $100 billion in four-week bills, $95 billion in eight-week bills, $19 billion in 10-year Treasury Inflation-Protected Securities, and $25 billion in 27-day cash management bills.

In the central bank space, Richmond Fed President Tom Barkin and Chicago Fed President Austan Goolsbee are scheduled to speak today.

The Bloomberg 30-day visible supply fell $2.316 billion to $18.811 billion on Wednesday, above the 12-month average of $13.942 billion.

This information is obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed by Wells Fargo Advisors. Additional information available by request.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.