Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Friday amid escalating tensions in the Middle East following strikes on energy facilities. Investors are also looking forward to next week’s preliminary reading of March purchasing managers’ indexes (PMIs) from S&P Global on Tuesday. As of 6:57 AM ET, the yield on the 10-year note is rising five basis points (0.05%) to 4.30%, while the 30-year bond yield is increasing three basis points (0.03%) to 4.87%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up eight basis points (0.08%) to 3.87%. 

Treasury yields were mixed on Thursday as initial jobless claims fell and continuing claims for the week prior picked up. The Leading Index declined in line with expectations in January, while new home sales declined more than expected, falling by 17.6% to an annualized rate of 587,000 in January after the prior month’s data was revised lower. The yield on the 10-year note was down two basis points (0.02%) to 4.25%, while the 30-year bond yield fell four basis points (0.04%) to 4.84%. The yield on the two-year note increased two basis points (0.02%) to 3.79%. As of end of day Thursday (March 19), futures markets are pricing in two basis points (0.02%) worth of rate hikes at the Federal Reserve's (Fed’s) upcoming April meeting, with a cumulative seven basis points (0.07%) worth of rate cuts by year-end 2026 and a cumulative 45 basis points (0.45%) worth of rate cuts by year-end 2027.

In the central bank space, Fed Vice Chair for Supervision Michelle Bowman and Fed Governor Christopher Waller are scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending March 19, the average 30-year fixed mortgage rate was up 11 basis points (0.11%) to 6.22%, versus 6.67% a year ago. The 15-year fixed mortgage rate increased four basis points (0.04%) to 5.54%, versus 5.83% a year ago.

The Bloomberg 30-day visible supply fell $812.8 million to $13.746 billion on Thursday, below the 12-month average of $14.028 billion.

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