Bond Market Commentary

Over in bond land, Treasury yields are mixed before the opening bell Friday as investors monitored escalating Iran-related tensions after U.S. President Donald Trump signaled the possibility of extensive military strikes following the Houthis’ involvement in the war. Meanwhile, investors are awaiting today’s economic releases, including preliminary July purchasing managers’ index (PMI) from the S&P Global and June new home sales. As of 6:56 AM ET, the yield on the 10-year note is unchanged at 4.69%, while the 30-year bond yield is increasing one basis point (0.01%) to 5.17%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 4.33%.

Treasury yields were higher on Thursday as initial jobless claims fell to the lowest level since 1969 and continuing claims for the week prior also decreased. Meanwhile, the Federal Reserve (Fed) Bank of Chicago’s National Activity Index for June rose less than expected. The yield on the 10-year note was up four basis points (0.04%) to 4.69%, while the 30-year bond yield rose two basis points (0.02%) to 5.16%. The yield on the two-year note increased five basis points (0.05%) to 4.35%. As of end of day Thursday (July 23), futures markets are pricing in eight basis points (0.08%) worth of rate hikes at the Federal Reserve's upcoming meeting next week, with a cumulative 44 basis points (0.44%) worth of rate hikes by year-end 2026.

On the data front, the preliminary reading of S&P Global’s composite PMI for July is expected to come in at 52.2 versus the prior month’s 51.9, with the manufacturing and services PMIs forecasted at 54.4 and 51.5, respectively, compared to the prior month’s 53.9 and 51.2, respectively. Meanwhile, new home sales are projected to have been at an annualized 607,000 pace in June versus the prior month’s 580,000 pace. The finalized reading of June building permits will be released today.

For the week ending July 23, the average 30-year fixed mortgage rate was up three basis points (0.03%) to 6.58%, versus 6.74% a year ago. The 15-year fixed mortgage rate increased three basis points (0.03%) to 5.96%, versus 5.87% a year ago.

The Bloomberg 30-day visible supply rose $961 million to $115.937 billion on Thursday, above the 12-month average of $13.977 billion.

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