Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Friday ahead of today’s January Producer Price Index (PPI) and February’s Chicago purchasing managers’ index (PMI) data from Market News International (MNI). As of 6:57 AM ET, the yield on the 10-year note is decreasing two basis points (0.02%) to 3.98%, while the 30-year bond yield is falling one basis point (0.01%) to 4.65%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 3.40%.

Treasury yields were lower on Thursday as initial jobless claims increased while continuing claims for the week prior decreased. The yield on the 10-year note was down five basis points (0.05%) to 4.00%, while the 30-year bond yield fell four basis points (0.04%) to 4.66%. The yield on the two-year note decreased four basis points (0.04%) to 3.43%. As of end of day Thursday (February 26), futures markets are pricing in one basis point (0.01%) worth of rate cuts at the Federal Reserve's (Fed’s) upcoming March meeting, with a cumulative 57 basis points (0.57%) worth of rate cuts by year-end 2026 and a cumulative 74 basis points (0.74%) worth of rate cuts by year-end 2027.

On the data front, the headline PPI for January is expected to show price increases of 0.3% month-over-month (MOM) and 2.6% year-over-year (YOY) versus the prior month’s increases of 0.5% and 3.0%, respectively. The core PPI is expected to show price increases of 0.3% MOM and 3.0% YOY versus the prior month’s increases of 0.7% and 3.3%, respectively. Meanwhile, construction spending is expected to have increased 0.2% MOM in December. The MNI Chicago PMI for February is expected to come in at 52.1, down from the prior month’s 54.0. The Kansas City Fed’s February Survey of Tenth District Services will be released today, with the services composite index projected to remain steady at 2.

Mortgage rates were mixed in the latest week.
For the week ending February 26, the average 30-year fixed mortgage rate was down three basis points (0.03%) to 5.98%, versus 6.76% a year ago. The 15-year fixed mortgage rate increased 9 basis points (0.09%) to 5.44%, versus 5.94% a year ago.

The Bloomberg 30-day visible supply fell $2.699 billion to $13.345 billion on Thursday, below the 12-month average of $13.921 billion. 

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