Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Wednesday amid optimism that a U.S.-Iran deal will be reached. Market participants are also awaiting today’s economic releases, including July’s ADP National Employment Report, along with July services purchasing managers’ indexes (PMIs) from the Institute for Supply Management (ISM). As of 6:58 AM ET, the yield on the 10-year note is unchanged at 4.61%, while the 30-year bond yield is also unchanged at 5.17%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 4.20%.

Treasury yields were lower on Tuesday as the Job Openings and Labor Turnover Survey (JOLTS) showed job openings falling more than expected to 7.36 million in June. June's trade deficit narrowed less than expected to $73.3 billion as both imports and exports registered smaller-than-expected declines, falling 1.8% and 0.9% month-over-month (MOM), respectively. Meanwhile, factory orders unexpectedly declined 0.3% MOM in June. The yield on the 10-year note was down seven basis points (0.07%) to 4.61%, while the 30-year bond yield fell six basis points (0.06%) to 5.17%. The yield on the two-year note decreased five basis points (0.05%) to 4.19%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications decreased by 2.9% for the week ending July 31 versus the prior week’s decrease of 6.4%. The ADP National Employment Report for July is expected to show private job gains of 65,000, versus the prior month’s 98,000. S&P Global’s finalized services PMI for July is expected to remain unchanged at 53.6. Meanwhile, ISM’s July services PMI and the prices paid component are expected to register 54.5 and 65.0, respectively, versus the prior month’s 54.0 and 67.7, respectively. The Department of Energy’s measure of crude oil inventories is expected to have decreased by 1.50 million barrels for the week ending July 31 versus the prior week’s decrease of 7.17 million barrels.

In the auction space, the U.S. Treasury is set to issue $72 billion in 17-week bills.

In the central bank space, Federal Reserve (Fed) Governor Lisa Cook and San Francisco Fed President Mary Daly are scheduled to speak today.

The Bloomberg 30-day visible supply rose $595.6 million to $23.942 billion on Tuesday, remaining well above the 12-month average of $14.140 billion.

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