Bond Market Commentary

Over in bond land, Treasury yields are falling ahead of the opening bell Tuesday as investors assess the future course of interest rate hikes by the Federal Reserve (Fed). The yield on the benchmark 10-year note is down four basis points (0.04%) to 3.55%, while the 30-year bond yield is shedding four basis points (0.04%) to 3.56%. The yield on the more policy-sensitive two-year note is slipping four basis points (0.04%) to 4.36%. Yesterday, yields jumped following stronger-than-expected economic data. The Institute of Supply Management’s (ISM) Services Index came in at 56.5 for November, far exceeding the expected 53.5 print. Recent economic data has suggested a robust and resilient economy, which could mean the Fed will need to hike rates to a higher terminal rate and keep them elevated for some time to curb inflation. The yield on the 10-year note increased eleven basis points (0.11%) to 3.59%, while the 30-year bond yield gained seven basis points (0.07%) to 3.60%. The yield on the two-year note settled fourteen basis points (0.14%) higher at 4.40%. On the data front today, investors can look for an update on the U.S. trade balance for October. The Fed remains in a media blackout period ahead of their December 14-15 policy meeting.

The Bloomberg 30-day visible supply fell $404 billion to $8.816 billion on Monday, below the 12-month average of $9.995 billion.

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