Bond Market Commentary

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

March 30, 2017

Wednesday’s Action

Treasuries rose sending yields lower Wednesday. U.S. government debt advanced in limited trading attributed to continued concerns over President Trump’s ability to enact proposed economic policies. Investors also weighed commentary by policy members. In a speech in Frankfurt, Chicago President Charles Evans said he would support one or two more interest rate hikes in 2017. Boston President Eric Rosengren and San Francisco’s John Williams both suggested the central bank should rule out tightening more than three times this year. Benchmark 10-year notes increased 8/32 to yield 2.38%. The 30-year bond was 15/32 higher at 2.99%.

Treasury Auction

The Treasury Department’s auction of $28 billion in 7-year notes saw slightly stronger demand Wednesday. The sale drew a yield of 2.215% with indirect bidders, which includes central banks and money managers, purchasing 71.1% of the offering. The bid-to-cover was 2.56 compared to the average of 2.51 for the previous 10 auctions. The Treasury also brought $13 billion of two-year floating rate notes to market with a yield of 0.109%. Demand was solid with a bid-to-cover increasing to 3.43 from 3.08 at the previous auction of the security.

Municipal Market Commentary

Wednesday, municipal market indices were mostly unchanged. As reported on March 22, U.S. municipal bond funds posted net inflows of $173.5 million compared with $118.1 million of net outflows the prior week, according to Lipper FMI. Tax-exempt new issue supply is expected to total approximately $5.8 billion this week, up from $4.8 billion the prior week but below the 2017 weekly average of $6.0 billion. The Bloomberg 30-day visible supply fell $466 billion to $11.577 billion on Wednesday, below the 12-month average of $12.291 billion. The total is comprised of $1.098 billion of competitive bonds and $10.479 billion of negotiated bonds.

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

Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors, and other Wells Fargo affiliates. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.

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