Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Tuesday as investors are looking forward to economic measures from the Richmond and Philadelphia Federal Reserve (Fed) banks, along with housing and consumer confidence data. Investors are also awaiting Canada’s response to heightened U.S. tariffs. As of 7:00 AM ET, the yield on the 10-year note is decreasing three basis points (0.03%) to 4.67%, while the 30-year bond yield is falling two basis points (0.02%) to 5.20%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 4.22%. 

Treasury yields were lower on Monday as markets digested details on the U.S.’s economic measures against Iran. The yield on the 10-year note was down three basis points (0.03%) to 4.70%, while the 30-year bond yield fell five basis points (0.05%) to 5.22%. The yield on the two-year note decreased one basis point (0.01%) to 4.23%.

On the data front, the Philadelphia Fed will release their August Nonmanufacturing Business Outlook Survey, with the diffusion index of current general activity forecasted to decrease to 3.6 from the prior month’s 7.4. The Federal Housing Finance Agency’s House Price Index is expected to show an increase of 0.2% month-over-month (MOM) in June, compared to the prior month’s increase of 0.3%. The S&P Cotality Case-Shiller 20-City Home Price Index for June is expected to register increases of 0.10% MOM and 1.80% year-over-year, versus the prior month’s increases of 0.15% and 1.63%, 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 7 from the prior month’s 5. The Richmond Fed’s August Fifth District Survey of Service Sector Activity will also be released today, with the headline composite services index expected to improve to -3 from the prior month’s -5. Meanwhile, new home sales are projected to have been at an annualized 620,000 pace in July versus the prior month’s 628,000 pace. The Conference Board’s reading of August consumer confidence is projected to come in at 90.2 versus the prior month’s 90.8. The finalized reading of July building permits is projected to come in roughly unchanged from the preliminary reading of an annualized 1.443 million.

In the auction space, the U.S. Treasury is set to issue $95 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 fell $2.632 billion to $19.471 billion on Monday, above the 12-month average of $14.533 billion.

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