April 12, 2021
In bond land, Treasuries are little changed ahead of the opening bell Monday as investors await this afternoon's Treasury auctions and anticipate tomorrow's update on consumer price inflation. The yield on the benchmark 10-year note is holding steady at 1.66%, while the yield on the 30-year bond is down one basis point to 2.32%. On the short end of the curve, the yield on the two-year note is off one basis point to 0.15%. In the auction space, the U.S. Treasury Department plans to sell $38 billion in a 10-year note reopening and $58 billion in three-year notes. $54 billion in 26-week bills will also be auctioned today, while $24 billion in 30-year bonds are scheduled to be sold tomorrow (Tuesday). In central bank news, comments from Fed Chair Jerome Powell are once again in focus after his interview on CBS "60 Minutes" aired Sunday night. The Fed chief said the economy is at an "inflection point," thanks to solid fiscal and monetary policy support and accelerating vaccine distributions. He noted that the labor market should continue to rebound in the months ahead, though risks remain as the pandemic lingers. Meanwhile, Boston Fed President Eric Rosengren is scheduled to talk about the economic outlook at 1:00 p.m. ET. On the data front, the sole economic release of note is the monthly budget statement, due at 2:00 p.m. ET. Tomorrow, CPI data will be closely scrutinized, with the headline reading projected to jump 2.5% year-over-year in March. This follows Friday's session, during which Treasuries weakened after a data release revealed producer prices increased more than expected in March. Headline PPI jumped 1% during the period, doubling consensus estimates. The year-over-year reading surged 4.2%, the largest annual gain since September 2011 and followed a 2.8% uptick in February. The yield on the benchmark 10-year note rose four basis points to 1.66%, but still ended the week six basis points lower.
Mortgage rates declined for the first time since January, snapping a seven-week streak of increases as U.S. Treasury yields have stabilized, according to the Freddie Mac Primary Market Mortgage Survey® (PMMS®). For the period ending April 8, 2021, the 30-year fixed rate was down five basis points to 3.13%, after reaching the highest since June last week. This compares to 3.33% at this time last year and a record low of 2.65% reached in early January. The 15-year fixed mortgage rate slipped three basis points to 2.42%, versus 2.77% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 2.92%, bucking the downtrend to rise eight basis points and compares to 3.40% at this time last year.
Municipal Market Commentarycall out
The Bloomberg 30-day visible supply fell $1.867 billion to $10.273 billion on Friday, below the 12-month average of $12.717 billion.
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