Bond Market Commentary

Over in bond land, Treasury yields are mixed before the opening bell Wednesday ahead of today’s economic releases, including the advance reading of first-quarter gross domestic product (GDP) and March’s personal income, personal spending, and Personal Consumption Expenditures (PCE) deflator data. As of 6:49 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.16%, while the 30-year bond yield is falling two basis points (0.02%) to 4.63%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 3.66%.

Treasury yields were lower on Tuesday as the advance goods trade deficit unexpectedly widened as job openings fell more than forecasted and consumer confidence fell to the lowest level since the pandemic. Meanwhile, the preliminary March reading of wholesale inventories showed a slightly less than anticipated increase, while measures of home prices for February came in at or below expectations. The yield on the 10-year note was down four basis points (0.04%) to 4.17%, while the 30-year bond yield fell three basis points (0.03%) to 4.65%. The yield on the two-year note decreased four basis points (0.04%) to 3.65%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications decreased by 4.2% for the week ending April 25 versus the prior week’s decrease of 12.7%. The Automatic Data Processing Employment Change Report for April is expected to show private nonfarm job gains of 115,000, versus the prior month’s 155,000. The advance reading of first-quarter GDP is forecasted to show an annualized contraction of 0.2% versus the prior quarter’s 2.4% annualized growth, while the advance reading of the first-quarter GDP Price Index, the core PCE Price Index, and personal consumption are expected to come in at annualized increases of 3.1%, 3.1%, and 1.2%, respectively, compared to the prior readings of 2.3%, 2.6%, and 4.0%, respectively. The first-quarter Employment Cost Index is expected to rise by 0.9%, similar to the previous reading. The Market News International Chicago purchasing managers’ index for April is expected to come in at 45.9, down from the prior month’s 47.6. Personal income is expected to have increased 0.4% month-over-month (MOM) in March, versus the prior month’s 0.8%, while personal spending is expected have increased 0.6% MOM in March compared to the prior month’s 0.4% increase. The PCE deflator for March is expected to be flat MOM and decelerate to 2.2% year-over-year (YOY) from the prior month’s 0.3% and 2.5%, respectively. Meanwhile, the core PCE deflator for March is expected to have increased 0.1% MOM, decelerating from the prior month’s 0.4%, and eased to 2.6% YOY from the prior month’s 2.8%. Pending home sales for March are expected to have increased 1.0% MOM and declined 5.7% year-over-year (YOY), versus the prior month’s 2.0% increase and decline of 7.2%, respectively. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 579,000 barrels for the week ending April 25 versus the prior week’s increase of 244,000 barrels.

In the auction space, the U.S. Treasury is set to issue $60 billion in 17-week bills.

The Bloomberg 30-day visible supply rose $2.380 billion to $18.887 billion on Tuesday, compared to the 12-month average of $12.862 billion.

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