Bond Market Commentary

Over in bond land, Treasury yields are mostly higher before the opening bell Wednesday as markets continue to assess ongoing developments between the U.S. and Iran. Investors will be looking forward to today’s economic data, including August’s ADP employment data, July’s factory orders, and the Federal Reserve’s (Fed’s) Beige Book. As of 6:56 AM ET, the yield on the 10-year note is rising one basis point (0.01%) to 4.81%, while the 30-year bond yield is also increasing one basis point (0.01%) to 5.28%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.40%. 

Treasury yields were higher on Tuesday as July’s job openings rose less than forecasted, while the Institute for Supply Management’s August manufacturing purchasing managers’ index fell more than expected to 54.6 and the prices paid component held steady. Separately, July’s construction spending unexpectedly declined. The yield on the 10-year note was up five basis points (0.05%) to 4.80%, while the 30-year bond yield rose three basis points (0.03%) to 5.27%. The yield on the two-year note increased six basis points (0.06%) to 4.40%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications increased by 0.8% for the week ending August 28 versus the prior week’s decrease of 1.0%. The ADP National Employment Report for August is expected to show private job gains of 47,000, versus the prior month’s 44,000. July’s factory orders are expected to have increased 0.7% month-over-month (MOM) versus the prior month’s decrease of 0.3%. Meanwhile, July’s finalized durable goods orders are expected to show a 1.1% MOM increase, unchanged from the preliminary reading. The Department of Energy’s measure of crude oil inventories is expected to have increased by 60,000 barrels for the week ending August 28 versus the prior week’s increase of 95,000 barrels.

In the auction space, the U.S. Treasury is set to issue $72 billion in 17-week bills.

The Bloomberg 30-day visible supply rose $2.295 billion to $25.710 billion on Tuesday, above the 12-month average of $14.844 billion.

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