Bond Market Commentary

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

February 15, 2019

Thursday's Action

Treasuries strengthened along the curve Thursday as a weak economic update increased demand for the perceived “safe-haven” of U.S. government backed debt. The yield on the benchmark 10-year slipped five basis points to 2.65%. On the data front, a survey from the U.S. Commerce Department revealed retail sales unexpectedly declined 1.2% in December, the largest monthly decline since September 2009. Following the disappointing update yields which were little changed in early trading, quickly dropped as investors grew concerned that global economic growth may be slowing. The weak economic updates were not limited to the United States as Germany’s fourth quarter GDP update fell short of expectations and narrowly missed a recessionary reading. In central bank news, Fed Governor Lael Brainard stated that economic downside risks have “definitely increased” and the central bank needs to be cautious with any further rate increases. Brainard also indicated that she’s in favor of the Federal Reserve ending its balance sheet runoff earlier than expected. On the short end of the curve, the yield on the two-year note declined three basis points to 2.50% while the 30-year bond yield fell two basis points to 3.00%.


Mortgage rates remained near the lowest levels in over a year in the most recent week, per the Freddie Mac Primary Market Mortgage Survey® (PMMS®). For the period ending February 14, the 30-year fixed rate fell one basis point to 4.37%. This compares to 4.33% at this time last year. The 15-year fixed rate mortgage was off three basis points to 3.81% and compares to 3.78% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.88, down three basis points from last week and compares to 3.63% at this last year.

Municipal Market Commentary

Tax-exempt new issue supply is expected to total $6.8 billion during the week of February 11, compared to $6.3 billion the previous week and the 2019 weekly average of $4.4 billion. The Bloomberg 30-day visible supply fell $1.292 billion to $7.271 billion on Thursday below the 12-month average of $9.115 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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