Bond Market Commentary

Over in bond land, Treasury yields are mostly lower before the opening bell Thursday ahead of today’s update on unemployment claims, along with March’s industrial production and capacity utilization data. Meanwhile, markets remain optimistic that a U.S.-Iran peace deal will be reached. As of 6:56 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.27%, while the 30-year bond yield is unchanged at 4.90%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 3.75%. 

Treasury yields were higher on Wednesday as import prices posted a smaller than expected increase in March, rising 0.8% month-over-month (MOM) and 2.1% year-over-year (YOY). Meanwhile, export prices increased more than expected, climbing 1.6% MOM and 5.6% YOY. Homebuilder sentiment for April fell more than anticipated, while the Federal Reserve (Fed) Bank of New York’s Empire State Manufacturing Survey showed the headline general business conditions index rising significantly more than expected in April. The yield on the 10-year note was up three basis points (0.03%) to 4.28%, while the 30-year bond yield rose four basis points (0.04%) to 4.90%. The yield on the two-year note increased two basis points (0.02%) to 3.76%.

On the data front, the New York Fed will release their Business Leaders Survey for April, with the headline business activity index expected to improve to -20.0 from the prior month’s -22.6. Initial jobless claims for the week ending April 11 are expected to come in at 213,000, lower than the prior week’s 219,000. Continuing claims are expected to rise slightly to 1.81 million for the week ending April 4 from the prior week’s 1.79 million. The Philadelphia Fed’s Manufacturing Business Outlook Survey for April will be released, with the diffusion index for current general activity expected to fall to 10.0 from the prior month’s 18.1. Industrial production is expected to have expanded by 0.1% MOM in March, compared to the prior month’s increase of 0.2%, while capacity utilization is forecasted to remain steady at 76.3%.

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

In the central bank space, Fed Governor Stephen Miran and New York Fed President John Williams are scheduled to speak today.

The Bloomberg 30-day visible supply rose $1.668 billion to $21.616 billion on Wednesday, above the 12-month average of $14.119 billion.

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