Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Tuesday ahead of today’s July existing home sales data. Meanwhile, a reading of small business optimism increased more than expected in July. Investors are also looking forward to tomorrow’s July Consumer Price Index data. As of 6:55 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.73%, while the 30-year bond yield is also increasing two basis points (0.02%) to 5.27%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 4.25%. 

Treasury yields were higher on Monday following hardened stances from both U.S. President Donald Trump and Iran regarding negotiations to end the war and reopen the Strait of Hormuz. The yield on the 10-year note was up six basis points (0.06%) to 4.71%, while the 30-year bond yield rose five basis points (0.05%) to 5.25%. The yield on the two-year note increased four basis points (0.04%) to 4.24%.

On the data front, the National Federation of Independent Business’s gauge of small business optimism increased to 99.8 in July from the prior month’s 97.4. Existing home sales are forecasted to have been at an annualized 4.05 million pace in July versus the prior month’s 4.09 million pace, corresponding to a decrease of 1.0% month-over-month versus the prior month’s decrease of 2.4%. The Federal Reserve (Fed) Bank of New York's second-quarter Report on Household Debt and Credit is scheduled for release.

In the auction space, the U.S. Treasury is set to issue $95 billion in six-week bills and $58 billion in three-year notes.

In the central bank space, Chicago Fed President Austan Goolsbee is scheduled to speak today.

The Bloomberg 30-day visible supply rose $908 million to $21.099 billion on Monday, above the 12-month average of $14.204 billion.

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