Bond Market Commentary

Over in bond land, Treasury yields are little changed before the opening bell Friday as investors are looking forward to today’s key economic releases, including January’s Job Openings and Labor Turnover Survey (JOLTS), personal income, personal spending, and Personal Consumption Expenditures (PCE) deflator (the Federal Reserve’s [Fed’s] preferred gauge of inflation). As of 6:56 AM ET, the yield on the 10-year note is unchanged at 4.26%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.89%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 3.73%.

Treasury yields were mostly higher on Thursday as investors evaluated statements on the Iran War from the country’s new Supreme Leader, Mojtaba Khamenei. The U.S. trade deficit declined following a pickup in exports and a decline in imports. Initial jobless claims came in lower than expected, while continuing claims for the week prior decreased. Meanwhile, housing starts rose in January while preliminary building permits data showed slowing activity. The yield on the 10-year note was up three basis points (0.03%) to 4.26%, while the 30-year bond yield was unchanged at 4.88%. The yield on the two-year note increased nine basis points (0.09%) to 3.74%. As of end of day Thursday (March 12), futures markets are pricing in no change in the policy rate at the Fed’s upcoming March meeting, with a cumulative 19 basis points (0.19%) worth of rate cuts by year-end 2026 and a cumulative 54 basis points (0.54%) worth of rate cuts by year-end 2027.

On the data front, the second readings of fourth-quarter GDP, GDP Price Index, core PCE Price Index, and personal consumption are expected to come in at annualized growth rates of 1.4%, 3.6%, 2.7% and 2.4%, respectively, all unchanged from the prior readings. Personal income is expected to have increased 0.5% month-over-month (MOM) in January, more than the prior month’s increase of 0.3% while personal spending is expected to have increased 0.3% MOM in January less than the prior month’s 0.4%. The PCE deflator for January is expected to have risen 0.3% MOM and 2.9% year-over-year (YOY), versus the prior month’s 0.4% and 2.9%, respectively, while the core PCE deflator is projected to have increased 0.4% MOM and 3.1% YOY, compared to prior month's 0.4% and 3.0%, respectively. The preliminary reading of January’s durable goods orders is forecasted to show a 1.1% MOM increase compared to the prior month’s decline of 1.4%. Meanwhile, the preliminary March reading of consumer sentiment from the University of Michigan is expected to come in at 54.8, down from the prior month’s 56.6, while one-year and 5-10-year inflation expectations are projected to come in at 3.7% and 3.4%, respectively, higher than the February readings. The January JOLTS is forecasted to show job openings of 6.8 million.

Mortgage rates were higher in the latest week.
For the week ending March 12, the average 30-year fixed mortgage rate was up 11 basis points (0.11%) to 6.11%, versus 6.65% a year ago. The 15-year fixed mortgage rate increased seven basis points (0.07%) to 5.50%, versus 5.80% a year ago.

The Bloomberg 30-day visible supply fell $3.691 billion to $10.924 billion on Thursday, below the 12-month average of $13.989 billion.

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