Bond Market Commentary

Updates on bond market data, news, and activity each day.

May 17, 2019


Thursday's Action

Treasuries weakened along the curve Thursday as investors assessed the latest trade headlines and stronger than anticipated economic updates. The yield on the benchmark 10-year note climbed three basis points to 2.40% and is now essentially flat with the yield on the 3-month T-bill. On the short end of the curve, the yield on the two-year note advanced four basis points to 2.20% while the yield on the 30-year gained two basis points to 2.84%. On the economic front, a report showed housing starts rose 5.7% in April, topping the prior period’s upwardly revised 1.7% figure. Separately, building permits advanced 0.6% last month, better than the slight dip seen in March. Additionally, initial jobless claims came in at 212,000 in the most recent week, pointing to sustained strength in the labor market. In central bank news, Fed Governor Brainard reiterated the importance for inflation figures to climb back up to the Federal Reserve’s 2.0% target.

Mortgages

Mortgage rates edged lower in the most recent week, as lingering trade concerns suppressed treasury yields, according to the Freddie Mac Primary Market Mortgage Survey® (PMMS®). For the period ending May 16, the 30-year fixed rate fell three basis points for the week to 4.07%. This compares to 4.61% at this time last year. The 15-year fixed rate mortgage slipped four basis points to 3.53%, which compares to 4.08% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.66%, up three basis points from the prior week and compares to 3.82% at this time last year.

Municipal Market Commentary

Tax-exempt new issue supply is expected to total $6.8 billion during the week of May 13, compared to $4.4 billion the previous week and the 2019 weekly average of $5.1 billion. The Bloomberg 30-day visible supply fell $1.273 billion to $8.521 billion on Thursday, below the 12-month average of $8.952 billion.

This information is obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed by Wells Fargo Advisors.

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