Bond Market Commentary

Over in bond land, Treasury yields are mostly unchanged before the opening bell Thursday as oil prices remain elevated despite the International Energy Agency announcing plans yesterday for 400 million barrels of oil to be released from emergency reserves. Investors will be assessing further developments in the Iran war, along with today’s economic releases, including unemployment claims data and January’s trade data, housing starts, and preliminary building permits. As of 6:59 AM ET, the yield on the 10-year note is decreasing one basis point (0.01%) to 4.22%, while the 30-year bond yield is unchanged at 4.88%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is unchanged at 3.65%.

Treasury yields were higher on Wednesday as the headline Consumer Price Index (CPI) came in as expected in February, rising 0.3% month-over-month (MOM) and 2.4% year-over-year (YOY). The core CPI (which excludes food and energy) increased 0.2% MOM and 2.5% YOY in February, both in line with expectations. The yield on the 10-year note was up seven basis points (0.07%) to 4.23%, while the 30-year bond yield rose nine basis points (0.09%) to 4.88%. The yield on the two-year note increased six basis points (0.06%) to 3.65%.

On the data front, the U.S. trade deficit is expected to narrow in January to $66.0 billion from the prior month’s $70.3 billion. Initial jobless claims for the week ending March 7 are expected to come in at 215,000, higher than the prior week’s 213,000, while continuing claims are expected to fall slightly to 1.85 million for the week ending February 28 from the prior week’s 1.87 million. Housing starts are expected to have been an annualized 1.34 million in January versus the prior month’s 1.40 million, corresponding to a MOM decrease of 4.5% versus the prior month’s increase of 6.2%. Meanwhile, the preliminary reading of building permits for January are projected to come in slightly lower at an annualized pace of 1.41 million corresponding to a MOM decrease of 3.1%. The Federal Reserve (Fed) will release data on fourth-quarter household net worth.

In the auction space, the U.S. Treasury is set to issue $100 billion in four-week bills, $90 billion in eight-week bills, and $22 billion in 30-year bonds.

In the central bank space, Fed Vice Chair for Supervision Michelle Bowman is scheduled to speak today.

The Bloomberg 30-day visible supply fell $3.528 billion to $14.615 billion on Wednesday, above the 12-month average of $13.999 billion.

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