Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Monday as investors assess the latest efforts to open the Strait of Hormuz and ahead of today’s economic releases, including March factory orders and finalized durable goods order data. As of 7:02 AM ET, the yield on the 10-year note is rising three basis points (0.03%) to 4.40%, while the 30-year bond yield is increasing two basis points (0.02%) to 4.98%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up four basis points (0.04%) to 3.92%.

Treasury yields were lower on Friday as the Institute for Supply Management (ISM) manufacturing purchasing managers’ index (PMI) for April remained stable at 52.7, versus expectations for an increase, while the prices-paid component rose more than projected. Meanwhile, S&P Global’s finalized manufacturing PMI for April was revised slightly upward to 54.5. The yield on the 10-year note was unchanged at 4.37%, while the 30-year bond yield fell one basis point (0.01%) to 4.96%. The yield on the two-year note increased one basis point (0.01%) to 3.88%.

On the data front, March’s factory orders are expected to have increased 0.6% month-over-month (MOM) versus the prior month’s little change. Meanwhile, the finalized reading of March’s durable goods orders is forecasted to show a 0.8% MOM increase, similar to the initial 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.

In the central bank space, Federal Reserve Bank of New York President John Williams is scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending April 30, the average 30-year fixed mortgage rate was up seven basis points (0.07%) to 6.30%, versus 6.76% a year ago. The 15-year fixed mortgage rate increased six basis points (0.06%) to 5.64%, versus 5.92% a year ago.

Despite improving demand, elevated new-issue supply remains a near-term technical headwind, with the 30-day visible supply rising to $16.7 billion, above the $14.0 billion twelve-month average.

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