Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Friday ahead of today’s preliminary August Purchasing Managers’ Index (PMI) data. Markets are also awaiting further details on the U.S.’s planned tougher economic sanctions on Iran. As of 6:55 AM ET, the yield on the 10-year note is unchanged at 4.70%, while the 30-year bond yield is falling one basis point (0.01%) to 5.24%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.19%.

Treasury yields were higher on Thursday as markets digested the U.S. Treasury’s plans to increase buybacks for long-dated bonds. Initial jobless claims fell, while continuing claims for the prior week picked up. Meanwhile, the leading Index for July increased more than expected, rising 0.2%. The yield on the 10-year note was up five basis points (0.05%) to 4.70%, while the 30-year bond yield rose six basis points (0.06%) to 5.25%. The yield on the two-year note increased three basis points (0.03%) to 4.19%. As of end of day Thursday (August 20), futures markets are pricing in nine basis points (0.09%) worth of rate hikes at the Federal Reserve's upcoming September meeting, with a cumulative 23 basis points (0.23%) worth of rate hikes by year-end 2026 and a cumulative 39 basis points (0.39%) worth of rate hikes by year-end 2027.

On the data front, the preliminary reading of S&P Global’s manufacturing PMI for August is expected to remain unchanged at 53.9, while the services and composite PMIs are both forecasted at 54.0, compared to the prior month’s 54.6 and 54.5, respectively.

Mortgage rates were lower in the latest week.
For the week ending August 20, the average 30-year fixed mortgage rate was down two basis points (0.02%) to 6.65%, versus 6.58% a year ago. The 15-year fixed mortgage rate decreased one basis point (0.01%) to 5.95%, versus 5.69% a year ago.

The Bloomberg 30-day visible supply fell $3.130 billion to $23.237 billion on Thursday, compared to the 12-month average of $14.463 billion.

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