Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Wednesday as markets continue to assess developments in the Iran War and the effects on the supply of oil. Investors are also awaiting today’s release of February Consumer Price Index (CPI) data. As of 6:55 AM ET, the yield on the 10-year note is unchanged at 4.16%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.80%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 3.59%.

Treasury yields were higher on Tuesday as small business optimism fell and existing home sales unexpectedly increased in February, rising to an annualized pace of 4.09 million units. The yield on the 10-year note was up six basis points (0.06%) to 4.16%, while the 30-year bond yield rose eight basis points (0.08%) to 4.79%. The yield on the two-year note increased five basis points (0.05%) to 3.59%.

On the data front, the Mortgage Banker Association’s gauge of mortgage applications increased by 3.2% for the week ending March 6 versus the prior week’s increase of 11.0%. The headline CPI for February is expected to show price increases of 0.3% month-over-month (MOM) and 2.4% year-over-year (YOY), versus the prior month’s increases of 0.2% and 2.4%, respectively. Meanwhile, core CPI is expected to show price increases of 0.2% MOM and 2.5% YOY, versus the prior month’s increases of 0.3% and 2.5%, respectively. The Department of Energy’s measure of crude oil inventories is expected to have increased by 2.5 million barrels for the week ending March 6 versus the prior week’s increase of 3.5 million barrels. Meanwhile, the U.S. deficit for February is expected to widen to $310.0 billion from the prior month’s $94.6 billion. Data on February’s average hourly and weekly earnings is also scheduled for release.

In the auction space, the U.S. Treasury is set to issue $69 billion in 17-week bills and $39 billion in 10-year notes.

In the central bank space, Federal Reserve Vice Chair for Supervision Michelle Bowman is scheduled to speak today.

The Bloomberg 30-day visible supply rose $1.219 billion to $18.143 billion on Tuesday, above the 12-month average of $13.991 billion.

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