Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Wednesday ahead of today’s release of the Federal Reserve's minutes from the July 29 Federal Open Market Committee (FOMC) meeting. As of 6:54 AM ET, the yield on the 10-year note is unchanged at 4.70%, while the 30-year bond yield is also unchanged at 5.28%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 4.16%. 

Treasury yields were lower on Tuesday as July import and export prices unexpectedly fell 0.4% and 1.3% month-over-month (MOM), respectively, while rising a softer-than-expected 5.9% and 8.2% year-over-year (YOY), respectively. July’s industrial production showed a smaller-than-projected increase of 0.2% MOM, while capacity utilization rose to 76.3%. Meanwhile, July housing starts declined significantly more than expected, while preliminary building permits rose more than projected. Pending home sales unexpectedly declined 2.3% MOM and 2.5% YOY in July. The yield on the 10-year note was down two basis points (0.02%) to 4.70%, while the 30-year bond yield fell three basis points (0.03%) to 5.28%. The yield on the two-year note decreased one basis point (0.01%) to 4.17%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications decreased by 0.4% for the week ending August 14 versus the prior week’s increase of 3.6%. The Department of Energy’s measure of crude oil inventories is expected to have increased by 200,000 barrels for the week ending August 14 versus the prior week’s increase of 17.423 million barrels. 

In the auction space, the U.S. Treasury is set to issue $72 billion in 17-week bills and $16 billion in 20-year bonds.

The Bloomberg 30-day visible supply rose $4.796 billion to $26.097 billion on Tuesday, above the 12-month average of $14.380 billion.

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