Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Tuesday ahead of tonight’s deadline from President Donald Trump for Iran to reopen the Strait of Hormuz. Meanwhile, investors are looking forward to today’s economic releases, including February’s consumer credit data and preliminary reading of durable goods orders. As of 6:56 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.34%, while the 30-year bond yield is also increasing one basis point (0.01%) to 4.90%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 3.86%. 

Treasury yields were mostly higher on Monday as the Institute for Supply Management’s services purchasing managers’ index (PMI) for March declined more than anticipated, slipping to 54.0, while the prices paid component increased more than expected, climbing to 70.7. The yield on the 10-year note was up two basis points (0.02%) to 4.33%, while the 30-year bond yield was unchanged at 4.89%. The yield on the two-year note increased six basis points (0.06%) to 3.85%.

On the data front, the preliminary reading of February’s durable goods orders is forecasted to show a decline of 1.2% month-over-month, compared to the prior month’s little change. The Federal Reserve (Fed) Bank of New York will release their March Survey of Consumer Expectations, including a measure of inflation expectations. Consumer credit is expected to have expanded by $10.25 billion in February, more than the prior month’s increase of $8.05 billion.

In the auction space, the U.S. Treasury is set to issue $70 billion in six-week bills and $58 billion in three-year notes.

In the central bank space, Fed Vice Chair Philip Jefferson, Chicago Fed President Austan Goolsbee, and New York Fed President John Williams are scheduled to speak today.

The Bloomberg 30-day visible supply fell $241 million to $12.704 billion on Monday, below the 12-month average of $14.104 billion.

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