Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Monday following news that the U.S. and Iran had agreed to a ceasefire extension that would reopen the Strait of Hormuz, with the formal signing scheduled to occur on Friday. Investors are awaiting today’s key economic releases, including data on May’s industrial production and capacity utilization, along with a gauge of homebuilder sentiment for June. Market participants are also looking ahead to this week’s flurry of central bank meetings, headlined by the Federal Reserve’s (Fed’s) meeting ending on Wednesday, with comments from new Fed Chair Kevin Warsh and an updated Summary of Economic Projections due. As of 6:57 AM ET, the yield on the 10-year note is decreasing four basis points (0.04%) to 4.44%, while the 30-year bond yield is falling three basis points (0.03%) to 4.94%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down four basis points (0.04%) to 4.04%. 

Treasury yields were higher on Friday as the University of Michigan’s preliminary June reading of consumer sentiment rose more than projected and the measures of one- and 5-10-year inflation expectations eased to 4.6% and 3.4%, respectively. The yield on the 10-year note was up two basis points (0.02%) to 4.48%, while the 30-year bond yield rose one basis point (0.01%) to 4.97%. The yield on the two-year note increased two basis points (0.02%) to 4.08%.

On the data front, the New York Fed will release their Empire State Manufacturing Survey for June, with the headline general business conditions index expected to fall to 13.5 from the prior month’s 19.6. Industrial production is forecasted to have increased 0.3% month-over-month in May, compared to the prior month’s increase of 0.7%, while capacity utilization is projected to have risen to 76.2% from the prior month’s 76.1%. The National Association of Home Builders’ Housing Market Index is forecasted to come in at 37 for June, unchanged from the prior reading.

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 higher in the latest week. For the week ending June 11, the average 30-year fixed mortgage rate was up four basis points (0.04%) to 6.52%, versus 6.84% a year ago. The 15-year fixed mortgage rate increased five basis points (0.05%) to 5.84%, versus 5.97% a year ago.

The Bloomberg 30-day visible supply fell $714 million to $12.843 billion on Friday, below the 12-month average of $12.843 billion.

This information is obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed by Wells Fargo Advisors. Additional information available by request.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.