Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Monday ahead of planned U.S.-Iran peace talks and today’s July manufacturing purchasing managers’ index (PMI) data from the Institute for Supply Management (ISM). Investors are also looking forward to this week’s labor market data, capped by Friday’s July jobs report. As of 7:01 AM ET, the yield on the 10-year note is decreasing five basis points (0.05%) to 4.68%, while the 30-year bond yield is falling four basis points (0.04%) to 5.23%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down six basis points (0.06%) to 4.23%.

Treasury yields were higher on Friday as the second-quarter Employment Cost Index registered a greater-than-expected increase of 0.9%. Meanwhile, the finalized reading of July consumer sentiment from the University of Michigan was unexpectedly revised higher to 55.2, while one-year and five-to-ten-year inflation expectations held steady at 4.2% and 3.3%, respectively. The yield on the 10-year note was up six basis points (0.06%) to 4.73%, while the 30-year bond yield also rose six basis points (0.06%) to 5.27%. The yield on the two-year note increased four basis points (0.04%) to 4.29%.

On the data front, the finalized reading of S&P Global’s manufacturing PMI for July is expected to remain unchanged at 53.8. The ISM manufacturing PMI and prices paid component for July are expected to come in at 53.9 and 71.0, respectively, versus the prior month’s readings of 53.3 and 73.0, respectively. June’s construction spending is expected to have increased 0.2% month-over-month compared to the prior month’s 0.1%. July Omdia total vehicle sales are projected to edge lower to an annualized 16.32 million from previous month’s 16.52 million.

In the auction space, the U.S. Treasury is set to issue $92 billion in 13-week bills and $79 billion in 26-week bills.

Mortgage rates were higher in the latest week. For the week ending July 30, the average 30-year fixed mortgage rate was up eight basis points (0.08%) to 6.66%, versus 6.72% a year ago. The 15-year fixed mortgage rate increased eight basis points (0.08%) to 6.04%, versus 5.85% a year ago.

The Bloomberg 30-day visible supply rose $2.318 billion to $24.366 billion on Friday, above the 12-month average of $14.090 billion.

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