Bond Market Commentary

Over in bond land, Treasury yields are mixed before the opening bell Tuesday following the latest challenge to the Federal Reserve’s (Fed’s) independence as President Donald Trump attempted to remove Fed Governor Lisa Cook, citing allegations of mortgage fraud. Investors are also looking forward to today’s economic releases, including preliminary durable goods orders, consumer confidence, and home price data. As of 6:46 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.29%, while the 30-year bond yield is increasing four basis points (0.04%) to 4.93%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 3.70%.

Treasury yields were higher on Monday as new home sales fell by 0.6% to an annualized rate of 652,000 in July after the prior month’s data was revised higher. Meanwhile, the Chicago Fed’s National Activity Index for July and the general business activity index from the Dallas Fed’s Texas August Manufacturing Outlook Survey both declined. The yield on the 10-year note was up three basis points (0.03%) to 4.28%, while the 30-year bond yield rose one basis point (0.01%) to 4.89%. The yield on the two-year note increased two basis points (0.02%) to 3.72%.

On the data front, the Philadelphia Fed’s Nonmanufacturing Business Outlook Survey for August will be released today. The preliminary reading of July’s durable goods orders is forecasted to show a decrease of 3.8% month-over-month (MOM), compared to the prior month’s decrease of 9.4%. The Federal Housing Finance Agency’s House Price Index is expected to show a decrease of 0.1% MOM in June, compared to the prior month’s 0.2% decrease. The S&P CoreLogic Case-Shiller 20-City Home Price Index for June is expected to register a decrease of 0.20% MOM and an increase of 2.09% year-over-year (YOY), versus the prior month’s decrease of 0.34% and increase of 2.79%, respectively. The Richmond Fed’s August Fifth District Survey of Manufacturing Activity will be released today, with the headline composite manufacturing index expected to improve to negative 11 from the prior month’s negative 20. The Conference Board’s reading of August consumer confidence is projected to come in at 96.5 versus the prior month’s 97.2. The Dallas Fed will release their Texas Service Sector Outlook Survey for August.

In the auction space, the U.S. Treasury is set to issue $85 billion in six-week bills and $69 billion in two-year notes.

In the central bank space, Richmond Fed President Tom Barkin is scheduled to speak today.

The Bloomberg 30-day visible supply rose $1.179 billion to $11.708 billion on Monday, below the 12-month average of $14.027 billion.

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