Bond Market Commentary

Over in bond land, Treasury yields are mixed before the opening bell Wednesday ahead of today’s comments from Federal Reserve (Fed) Chair Jerome Powell. Investors are looking forward to data releases for retail sales, industrial production, and a gauge of homebuilder sentiment. As of 6:49 AM ET, the yield on the 10-year note is unchanged at 4.33%, while the 30-year bond yield is increasing one basis point (0.01%) to 4.79%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down two basis points (0.02%) to 3.82%.

Treasury yields were lower on Tuesday as import prices declined by 0.1% month-over-month (MOM) in March, while export prices were flat MOM, meeting expectations. The New York Fed’s Empire State Manufacturing Survey headline general business conditions index rose more than expected in April. The yield on the 10-year note was down four basis points (0.04%) to 4.33%, while the 30-year bond yield fell three basis points (0.03%) to 4.78%. The yield on the two-year note decreased one basis point (0.01%) to 3.84%.

On the data front, the Mortgage Bankers Association’s gauge of mortgage applications declined by 8.5% for the week ending April 11 versus the prior week’s increase of 20.0%. Retail sales are expected to have increased 1.4% MOM in March versus the prior month’s 0.2% gain. Industrial production is forecasted to have decreased 0.2% MOM in March versus the prior month’s 0.7% increase, while capacity utilization is projected to have fallen to 77.9% from the prior month’s 78.2%. The New York Fed will release their Business Leaders Survey for April, with the headline business activity index expected to rise to negative 12.1 from the prior month’s negative 19.3. Business inventories are expected to have risen 0.2% MOM in February, versus the prior month’s 0.3% increase. The National Association of Home Builders’ Housing Market Index is forecasted to decrease to 38 for April versus the prior month’s 39. The Department of Energy’s measure of crude oil inventories is expected to increase by 945,000 barrels for the week ending April 11 versus the prior week’s increase of 2.55 million barrels.

In the auction space, the U.S. Treasury is set to issue $60 billion in 17-week bills and $13 billion in 20-year bonds.

In the central bank space, Fed Chair Jerome Powell, Cleveland Fed President Beth Hammack, Dallas Fed President Lorie Logan, and Kansas City Fed President Jeffrey Schmid are scheduled to speak today.

The Bloomberg 30-day visible supply fell $389 million to $18.425 billion on Tuesday, compared to the 12-month average of $12.632 billion.

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