Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Thursday as markets continue to await news on a potential end to the Iran war. Investors are also anticipating today’s economic releases, including weekly initial and continuing jobless claims, March consumer credit, and preliminary first-quarter data on nonfarm productivity and unit labor costs, along with a slew of Federal Reserve (Fed) commentary. As of 6:53 AM ET, the yield on the 10-year note is decreasing two basis points (0.02%) to 4.33%, while the 30-year bond yield is falling one basis point (0.01%) to 4.93%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 3.85%.

Treasury yields were lower on Wednesday following optimism over the potential for a U.S.-Iran peace deal. The ADP National Employment Report showed private payroll growth for April of 109,000, short of expectations. The yield on the 10-year note was down seven basis points (0.07%) to 4.35%, while the 30-year bond yield fell five basis points (0.05%) to 4.94%. The yield on the two-year note decreased seven basis points (0.07%) to 3.87%.

On the data front, the Challenger Report for April showed job cuts rising more than expected, though still down 20.9% year-over-year (YOY) compared to prior month’s sharp decline of 78.0%. Preliminary first-quarter nonfarm productivity growth is expected to come in at 0.6% quarter-over-quarter (QOQ), versus the prior quarter’s increase of 1.8%, while unit labor costs are forecasted to have increased at an annualized 2.5% pace, following an annualized 4.4% increase in the prior quarter. Initial jobless claims for the week ending May 2 are expected to normalize to 205,000 from the prior week’s unexpectedly low 189,000, while continuing claims are expected to rise to 1.80 million for the week ending April 25 from the prior week’s 1.79 million. March’s construction spending is expected to have increased 0.2% month-over-month. The New York Fed will release their April Survey of Consumer Expectations, with the measure of one-year inflation expectations projected to come in at 3.50% from the prior month’s 3.42%. Consumer credit is expected to have expanded by $13.7 billion in March, more than the prior month’s increase of $9.5 billion.

In the auction space, the U.S. Treasury is set to issue $90 billion in four-week bills and $85 billion in eight-week bills.

In the central bank space, San Francisco Fed President Mary Daly, Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and New York Fed President John Williams are scheduled to speak today.

None at this time.

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