Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Friday amid reports of a ceasefire extension between the U.S. and Iran, pending approval from U.S. President Donald Trump. Investors are also looking forward to today’s April advance goods trade balance and preliminary wholesale inventory data. Next week, markets will be watching for May purchasing managers’ indexes (PMIs) and labor market data, capped by Friday’s (June 5) jobs report. As of 6:54 AM ET, the yield on the 10-year note is unchanged at 4.45%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.98%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.02%.

Treasury yields were lower on Thursday as spending and inflation data came in mostly as expected, while personal income was unexpectedly unchanged. Meanwhile, the second reading of first-quarter gross domestic product growth was revised downward to a 1.6% annualized pace. Both initial and continuing jobless claims ticked up. April durable goods order rose more than expected, while the month’s new home sales fell more than projected. The yield on the 10-year note was down three basis points (0.03%) to 4.45%, while the 30-year bond yield fell four basis points (0.04%) to 4.97%. The yield on the two-year note decreased one basis point (0.01%) to 4.02%. As of end of day Thursday (May 28), futures markets are pricing in no change in the policy rate at the Federal Reserve's (Fed’s) upcoming June meeting, with a cumulative 15 basis points (0.15%) worth of rate hikes by year-end 2026.

On the data front, the advance goods trade balance for April is projected to show a deficit of $87.0 billion, lower than the prior month’s revised deficit of $87.4 billion. The preliminary April reading of wholesale inventories is expected to show an increase of 0.8% month-over month (MOM) compared to the prior month’s increase of 1.3%, while retail inventories are forecasted to have increased by 0.5% MOM in April, versus the prior month’s revised increase of 0.6%. The Market News International Chicago PMI for May is expected to come in at 50.3, up from the prior month’s 49.2.

In the central bank space, Fed Vice Chair for Supervision Michelle Bowman, San Francisco Fed President Mary Daly, Philadelphia Fed President Anna Paulson, Minneapolis Fed President Neel Kashkari, and Kansas City Fed President Jeffrey Schmid are scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending May 28, the average 30-year fixed mortgage rate was up two basis points (0.02%) to 6.53%, versus 6.89% a year ago. The 15-year fixed mortgage rate increased two basis points (0.02%) to 5.87%, versus 6.03% a year ago.

The Bloomberg 30-day visible supply fell $386 million to $19.866 billion on Thursday, above the 12-month average of $13.949 billion.

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