Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Monday amid rising tensions in the Middle East and ahead of this week’s May inflation data, with the Consumer Price Index and Producer Price Index releases scheduled for Wednesday and Thursday, respectively. As of 6:58 AM ET, the yield on the 10-year note is rising two basis points (0.02%) to 4.55%, while the 30-year bond yield is increasing one basis point (0.01%) to 5.01%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 4.16%. 

Treasury yields were higher on Friday as the strong May jobs report bolstered expectations for Federal Reserve (Fed) rate hikes. Both nonfarm and manufacturing payrolls for May came in above expectations, increasing by 172,000 and 7,000, respectively. The unemployment rate and labor force participation rate remained steady at 4.3% and 61.8%, respectively. Average hourly earnings increased in line with projections, rising 0.3% month-over-month and 3.4% year-over-year. Meanwhile, consumer credit showed a greater-than-forecasted increase in April, expanding by $20.73 billion compared to the downwardly revised increase of $22.23 billion in March. The yield on the 10-year note was up six basis points (0.06%) to 4.53%, while the 30-year bond yield rose three basis points (0.03%) to 5.00%. The yield on the two-year note increased 11 basis points (0.11%) to 4.15%.

On the data front, the New York Fed will release their May Survey of Consumer Expectations, with the measure of one-year inflation expectations projected to come in at 3.70% from the prior month’s 3.64%.

In the auction space, the U.S. Treasury is set to issue $89 billion in 13-week bills and $77 billion in 26-week bills.

Mortgage rates were lower in the latest week. For the week ending June 4, the average 30-year fixed mortgage rate was down five basis points (0.05%) to 6.48%, versus 6.85% a year ago. The 15-year fixed mortgage rate decreased eight basis points (0.08%) to 5.79%, versus 5.99% a year ago.

None at this time.

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