Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Tuesday amid continuing uncertainty around the U.S.-Iran conflict. Investors will also be closely watching the release of June's Job Openings and Labor Turnover Survey (JOLTS), factory orders, and trade data. As of 6:59 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.69%, while the 30-year bond yield is also increasing one basis point (0.01%) to 5.24%. 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 lower on Monday as the Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) for July rose more than expected to 55.6, while the prices paid component fell to 71.1. June construction spending unexpectedly declined 0.1% month-over-month (MOM). The yield on the 10-year note was down five basis points (0.05%) to 4.68%, while the 30-year bond yield fell four basis points (0.04%) to 5.23%. The yield on the two-year note decreased five basis points (0.05%) to 4.24%.

On the data front, June's trade deficit is expected to narrow to $73.0 billion from the prior month's $77.6 billion. Imports are forecasted to decrease 1.9% MOM following the prior month's 3.3% increase, while exports are expected to decline 1.1% MOM after falling 3.2% in the previous month. The June JOLTS is forecasted to show 7.454 million job openings, down from the prior month's 7.594 million. June's factory orders are projected to rise 0.2% MOM versus the prior month's 1.3% decline, while finalized durable goods orders are expected to show a 0.3% MOM increase, unchanged from the prior reading.

In the auction space, the U.S. Treasury is set to issue $95 billion in six-week bills and $52 billion in 52-week bills.

In the central bank space, Federal Reserve Bank of Kansas City President Jeffrey Schmid is scheduled to speak today.

The Bloomberg 30-day visible supply fell $1.020 billion to $23.346 billion on Monday, above the 12-month average of $14.103 billion.

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