Bond Market Commentary

Over in bond land, Treasury yields are mostly lower before the opening bell Thursday ahead of today’s economic releases, including April’s retail sales, import price, and export price data, along with weekly unemployment claims. Markets are also awaiting any updates from the meeting in China between U.S. President Donald Trump and Chinese President Xi Jingping. As of 6:53 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.46%, while the 30-year bond yield is unchanged at 5.03%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 3.97%. 

Treasury yields were little changed on Wednesday as the April Producer Price Index (PPI) came in significantly hotter than expected, with the headline rate accelerating to 1.4% month-over-month (MOM) and 6.0% year-over-year (YOY) and the core measure rising 1.0% MOM and 5.2% YOY. Meanwhile, Kevin Warsh was confirmed as the new Federal Reserve (Fed) Chair. The yield on the 10-year note was up one basis point (0.01%) to 4.47%, while the 30-year bond yield also rose one basis point (0.01%) to 5.03%. The yield on the two-year note decreased one basis point (0.01%) to 3.98%.

On the data front, the April Import Price Index is projected to have increased 1.0% MOM and 3.1% YOY, accelerating from the prior month’s 0.8% and 2.1%, respectively, while the Export Price Index is forecasted to have increased 1.2% MOM and 7.0% YOY, compared to the prior month’s 1.6% and 5.6%, respectively. Initial jobless claims for the week ending May 9 are expected to come in at 205,000, higher than the prior week’s 200,000, while continuing claims are expected to come in at 1.78 million for the week ending May 2, up from the prior week’s 1.77 million. Retail sales are expected to have risen 0.5% MOM in April versus the prior month’s increase of 1.7%, while retail sales excluding autos are forecasted to have risen 0.7% MOM versus the prior month’s 1.9%. Business inventories are expected to have risen 0.9% MOM in March versus the prior month’s 0.4%.

In the auction space, the U.S. Treasury is set to issue $100 billion in four-week bills and $95 billion in eight-week bills.

In the central bank space, Fed Vice Chair for Supervision Michelle Bowman, Fed Governor Michael Barr, Fed Governor Stephen Miran, Cleveland Fed President Beth Hammack, Kansas City Fed President Jeffrey Schmid, and New York Fed President John Williams are scheduled to speak today.

The Bloomberg 30-day visible supply fell $2.513 billion to $14.405 billion on Wednesday, above the 12-month average of $13.989 billion.

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