Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Wednesday ahead of today’s delayed release of the January jobs report and final payroll revisions for the 12 months through March 2025. Investors are also looking forward to a slew of Federal Reserve (Fed) speakers scheduled for today. As of 7:02 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.13%, while the 30-year bond yield is unchanged at 4.78%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 3.45%.

Treasury yields were lower on Tuesday as retail sales were unexpectedly flat in December. Import and export prices rose 0.1% and 0.3% month-over-month (MOM), respectively. Meanwhile, small business optimism decreased in January. The yield on the 10-year note was down six basis points (0.06%) to 4.14%, while the 30-year bond yield fell eight basis points (0.08%) to 4.78%. The yield on the two-year note decreased four basis points (0.04%) to 3.45%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications decreased by 0.3% for the week ending February 6 versus the prior week’s decrease of 8.9%. January’s nonfarm payrolls are expected to expand by 65,000 versus the prior month’s 50,000 and manufacturing payrolls are projected to fall by 7,000 compared to the prior month’s decrease of 8,000. Average hourly earnings are projected to rise 0.3% MOM and 3.7% year-over-year for January, similar to the prior month’s increases of 0.3% and 3.8%, respectively. Both the unemployment rate and the labor force participation rate are expected to remain steady at 4.4% and 62.4%, respectively. Meanwhile, the Department of Energy’s measure of crude oil inventories is expected to have decreased by 24,000 barrels for the week ending February 6 versus the prior week’s decrease of 3.46 million barrels. The U.S. deficit for January is expected to narrow to $94.4 billion from the prior month’s $144.7 billion.

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills and $42 billion in 10-year notes.

In the central bank space, Cleveland Fed President Beth Hammack, Fed Vice Chair for Supervision Michelle Bowman, and Kansas City Fed President Jeffrey Schmid are scheduled to speak today.

The Bloomberg 30-day visible supply rose $383 million to $16.650 billion on Tuesday, above the 12-month average of $13.925 billion.

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