Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Friday as investors are awaiting today’s release of preliminary November purchasing managers’ indexes (PMIs) from S&P Global and finalized consumer sentiment data from the University of Michigan. As of 6:56 AM ET, the yield on the 10-year note is decreasing two basis points (0.02%) to 4.06%, while the 30-year bond yield is also falling two basis points (0.02%) to 4.70%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 3.51%.

Treasury yields were lower on Thursday as September saw non-farm payrolls increase by 119,000, above expectations, following the prior month’s revised figures declining by 4,000. Meanwhile, both the unemployment rate and labor force participation rate ticked up to 4.4% and 62.4%, respectively. Existing home sales for October came in higher than expected, while initial jobless claims declined and continuing claims increased. The yield on the 10-year note was down six basis points (0.06%) to 4.08%, while the 30-year bond yield fell four basis points (0.04%) to 4.72%. The yield on the two-year note decreased six basis points (0.06%) to 3.53%. As of end of day Thursday (November 20), futures markets are pricing in nine basis points (0.09%) worth of rate cuts at the Federal Reserve's (Fed’s) upcoming December meeting, with a cumulative 91 basis points (0.91%) worth of rate cuts by year-end 2026 and a cumulative 81 basis points (0.81%) worth of rate cuts by year-end 2027.

On the data front, the preliminary reading of S&P Global’s composite PMI for November is expected to come in at 54.5 versus the prior month’s 54.6, with the manufacturing and services PMIs forecasted at 52.0 and 54.6, respectively, compared to the prior month’s 52.5 and 54.8, respectively. The finalized November reading of consumer sentiment from the University of Michigan is expected to come in at 50.6 versus the initial reading of 50.3, while one-year and 5-10-year inflation expectations are expected to come in at 4.7% and 3.6%, respectively, similar to the initial readings. The finalized August wholesale inventories report is scheduled for release today. The Fed Bank of Kansas City will release their Services Survey for November.

In the central bank space, Fed Vice Chair Philip Jefferson, Fed Governor Michael Barr, Fed Governor Stephen Miran, Boston Fed President Susan Collins, Dallas Fed President Lorie Logan, and New York Fed President John Williams are scheduled to speak today.

Mortgage rates were higher in the latest week. For the week ending November 20, the average 30-year fixed mortgage rate was up two basis points (0.02%) to 6.26%, versus 6.84% a year ago. The 15-year fixed mortgage rate increased five basis points (0.05%) to 5.54%, versus 6.02% a year ago.

The Bloomberg 30-day visible supply fell $5.349 billion to $7.992 billion on Thursday, below the 12-month average of $13.827 billion.

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