Bond Market Commentary

Over in bond land, Treasury yields are unchanged before the opening bell Thursday as uncertainty about the Iran war persists, with the Strait of Hormuz remaining closed following claims of ceasefire violations. Investors are also looking ahead to today’s economic releases, including February’s personal income, personal spending, Personal Consumption Expenditures (PCE) deflator (the Federal Reserve’s [Fed’s] preferred gauge of inflation), and unemployment claims data. As of 6:57 AM ET, the yield on the 10-year note is unchanged at 4.29%, while the 30-year bond yield is also unchanged at 4.88%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 3.79%. 

Treasury yields were mostly unchanged on Wednesday following optimism over the announced U.S.-Iran ceasefire. Meanwhile, the Fed’s March 18 Federal Open Market Committee meeting minutes showing heightened concern over inflationary pressures, while also reflecting concerns over potential weakness in the labor market. The yield on the 10-year note was unchanged at 4.29%, while the 30-year bond yield rose one basis point (0.01%) to 4.88%. The yield on the two-year note was unchanged at 3.79%.

On the data front, personal income is expected to have increased 0.3% month-over-month (MOM) in February, versus the prior month’s increase of 0.4%, while personal spending is expected to have increased 0.6% MOM in February compared to the prior month’s increase of 0.4%. The PCE deflator for February is expected to have risen 0.4% MOM, accelerating from the prior month’s 0.3%, but remained steady at 2.8% year-over-year (YOY). Meanwhile, the core PCE deflator for February is expected to have increased 0.4% MOM, similar to the prior month, and decelerated to 3.0% YOY from the prior month’s 3.1%. Initial jobless claims for the week ending April 4 are expected to come in at 210,000, higher than the prior week’s 202,000, while continuing claims are expected to come in at 1.83 million for the week ending March 28, slightly down from the prior week’s 1.84 million. The third readings of fourth-quarter gross domestic product (GDP), the GDP Price Index, the core PCE Price Index, and personal consumption are expected to come in at annualized growth rates of 0.7%, 3.8%, 2.7% and 2.0%, respectively, all unchanged from the prior estimates. The finalized February reading of wholesale inventories is expected to show a decrease of 0.1% MOM versus the preliminary reading of 0.5%, while February’s wholesale trade sales is expected to come in at 0.6% MOM versus the prior month’s increase of 0.5%.

In the auction space, the U.S. Treasury is set to issue $80 billion in four-week bills, $75 billion in eight-week bills, and $22 billion in 30-year bonds.

The Bloomberg 30-day visible supply fell $746 million to $15.610 billion on Wednesday, above the 12-month average of $14.117 billion.

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