Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Wednesday as investors continue digesting yesterday’s labor market data and look ahead to tomorrow’s November Consumer Price Index report. As of 6:57 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.18%, while the 30-year bond yield is increasing four basis points (0.04%) to 4.85%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 3.51%.

Treasury yields were lower on Tuesday as November’s non-farm payrolls increased by 64,000 following a 105,000 decline in October driven by the federal government deferred resignations. Meanwhile, the November unemployment rate rose to 4.6% as the labor force participation rate picked up to 62.5%. S&P Global’s preliminary December readings for both the manufacturing and services purchasing managers’ indexes (PMIs) fell more than expected but remained in expansionary territory. The yield on the 10-year note was down two basis points (0.02%) to 4.15%, while the 30-year bond yield fell four basis points (0.04%) to 4.81%. The yield on the two-year note decreased one basis point (0.01%) to 3.49%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications decreased by 3.8% for the week ending December 12 versus the prior week’s increase of 4.8%. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 2.05 million barrels for the week ending December 12 versus the prior week’s decrease of 1.81 million barrels.

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills and $13 billion in 20-year bonds.

In the central bank space, Federal Reserve (Fed) Governor Christopher Waller, Atlanta Fed President Raphael Bostic, and New York Fed President John Williams are scheduled to speak today.

The Bloomberg 30-day visible supply rose $443 million to $7.733 billion on Tuesday, below the 12-month average of $13.918 billion.

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