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Bond Market Commentary

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

October 20, 2021


Treasuries are little changed ahead of the opening bell on Wednesday, as investors await the next catalyst for bond markets. The yield on the benchmark 10-year note is holdings steady at 1.64%, near its highest level since late May. The 30-year bond rate is adding one basis point to 2.10%, while the two-year note yield is off one basis point to 0.39%. The early moves follow a mixed session for Treasuries on Tuesday. The yield curve steepened as investors reined in their expectations for near-term monetary tightening from global central banks.

U.S. Fed fund futures data from CME Group showed markets pricing in a 64% probability for a rate hike next July, falling from 82% on Monday.

The more Fed-sensitive two-year note yield fell two basis points to 0.40%, while the yield on the 10-year note jumped five basis points to 1.64% and the 30-year bond rate climbed six basis points to 2.09%.

Market participants also assessed weaker-than-anticipated housing data on Tuesday, with housing starts and building permits both falling in September. The former unexpectedly declined 1.6% and the latter experienced its biggest monthly drop since February (-7.7%).

On the data front today, the lone update showed that MBA mortgage applications slid 6.3% in the week ending October 15, as higher mortgage rates dampened demand for refinancing and new purchases.

In central bank news, the Federal Reserve will release its Beige Book at 2:00 pm ET, which should provide anecdotal evidence of the economic conditions of the Fed’s 12 regions.

On the auction front, the U.S. Treasury is slated to sell $24 billion of 20-year bonds later this afternoon.

Municipal Market Commentary

The Bloomberg 30-day visible supply rose $3.151 billion to $17.481 billion on Tuesday, above the 12-month average of $11.334 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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