Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Monday as investors await the Federal Open Market Committee’s policy rate decision on Wednesday, along with tomorrow’s job openings data. As of 6:55 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.15%, while the 30-year bond yield is increasing two basis points (0.02%) to 4.81%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up two basis points (0.02%) to 3.58%.

Treasury yields were higher on Friday as the core Personal Consumption Expenditures Deflator, the Federal Reserve’s (Fed) preferred gauge of inflation, rose 0.2% month-over-month (MOM) and 2.8% year-over-year in September, both in line with expectations. Personal income and personal spending for September showed increases of 0.4% and 0.3% MOM, respectively. Meanwhile, the preliminary reading of December consumer sentiment from the University of Michigan increased more than anticipated to 53.3. The yield on the 10-year note was up four basis points (0.04%) to 4.14%, while the 30-year bond yield also rose four basis points (0.04%) to 4.79%. The yield on the two-year note increased four basis points (0.04%) to 3.56%.

On the data front, the New York Fed will release their November Survey of Consumer Expectations, which includes a measure of one-year ahead inflation expectations.

In the auction space, the U.S. Treasury is set to issue $77 billion in 26-week bills, $86 billion in 13-week bills, and $58 billion in three-year notes.

Mortgage rates were lower in the latest week. For the week ending December 4, the average 30-year fixed mortgage rate was down four basis points (0.04%) to 6.19%, versus 6.69% a year ago. The 15-year fixed mortgage rate decreased seven basis points (0.07%) to 5.44%, versus 5.96% a year ago.

The Bloomberg 30-day visible supply fell $2.436 billion to $12.637 billion on Friday, below the 12-month average of $13.903 billion.

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