Bond Market Commentary

Over in bond land, Treasury yields are unchanged before the opening bell Tuesday ahead of today’s June Consumer Price Index (CPI). Meanwhile a reading of small business optimism increased more-than-expected in June. Investors will also be watching Federal Reserve (Fed) Chair Kevin Warsh's testimony before the U.S. House Financial Services Committee. As of 6:55 AM ET, the yield on the 10-year note is unchanged at 4.62%, while the 30-year bond yield is also unchanged at 5.11%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 4.28%. 

Treasury yields were higher on Monday following President Donald Trump’s announcement of a U.S. blockade of Iran and its customers and that the U.S. will charge for cargo shipped through the Strait. The yield on the 10-year note was up six basis points (0.06%) to 4.62%, while the 30-year bond yield rose five basis points (0.05%) to 5.11%. The yield on the two-year note increased seven basis points (0.07%) to 4.28%.

On the data front, the National Federation of Independent Business’s gauge of small business optimism increased to 97.4 in June from the prior month’s 95.3. The headline CPI for June is expected to show a decrease of 0.1% month-over-month (MOM) and rise of 3.8% year-over-year (YOY), versus the prior month’s increases of 0.5% and 4.2%, respectively. Meanwhile, core CPI is expected to show price increases of 0.2% MOM and 2.8% YOY, compared to the prior month’s increases of 0.2% and 2.9%, respectively. Data on June’s average hourly and weekly earnings is also scheduled for release.

In the auction space, the U.S. Treasury is set to issue $95 billion in six-week bills.

In the central bank space, Fed Chair Kevin Warsh, Fed Vice Chair for Supervision Michelle Bowman, Fed Governor Michael Barr, Fed Governor Lisa Cook, and Chicago Fed President Austan Goolsbee are scheduled to speak today.

The Bloomberg 30-day visible supply fell $1.394 billion to $17.926 billion on Monday, above the 12-month average of $14.014 billion.

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