Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Monday as investors continue to assess developments in the Iran war, with hopes for deescalation rising following comments from President Donald Trump. Investors will also be looking forward to today’s comments from Federal Reserve (Fed) Chair Jerome Powell, along with economic data out later this week with the Institute for Supply Management’s manufacturing purchasing managers’ index and jobs report for March, out Wednesday and Friday, respectively. As of 6:56 AM ET, the yield on the 10-year note is decreasing four basis points (0.04%) to 4.39%, while the 30-year bond yield is falling two basis points (0.02%) to 4.94%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down three basis points (0.03%) to 3.88%.

Treasury yields were mixed on Friday as the finalized reading of March consumer sentiment from the University of Michigan fell to 53.3 from the preliminary reading of 55.5, while the inflation expectations rose to 3.8% for the one-year outlook and remained steady at 3.2% for the five-to-ten-year horizon. The yield on the 10-year note was up two basis points (0.02%) to 4.43%, while the 30-year bond yield rose three basis points (0.03%) to 4.96%. The yield on the two-year note decreased eight basis points (0.08%) to 3.91%.

On the data front, the Dallas Fed’s Texas Manufacturing Outlook Survey for March will be released, with the general business activity index expected to come in at 1.5, up from the prior month’s 0.2.

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.

In the central bank space, Fed Chair Jerome Powell and New York Fed President John Williams are scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending March 26, the average 30-year fixed mortgage rate was up 16 basis points (0.16%) to 6.38%, versus 6.65% a year ago. The 15-year fixed mortgage rate increased 21 basis points (0.21%) to 5.75%, versus 5.89% a year ago.

The Bloomberg 30-day visible supply rose $463 million to $15.857 billion on Friday, above the 12-month average of $14.150 billion.

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