Bond Market Commentary

Over in bond land, Treasury yields are lower before the opening bell Friday. Investors are looking forward to February’s purchasing managers’ index (PMI) data, along with finalized consumer sentiment and January’s existing home sales. As of 6:48 AM ET, the yield on the 10-year note is decreasing three basis points (0.03%) to 4.48%, while the 30-year bond yield is also falling three basis points (0.03%) to 4.72%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is down one basis point (0.01%) to 4.26%.

Treasury yields were mostly lower on Thursday as a measure of manufacturing activity from the Federal Reserve (Fed) Bank of Philadelphia fell less than expected and both initial jobless claims and continuing claims ticked up. The yield on the 10-year note was down two basis points (0.02%) to 4.51%, while the 30-year bond yield also fell two basis points (0.02%) to 4.75%. The yield on the two-year note was unchanged at 4.27%.

On the data front, the preliminary reading of S&P Global’s composite PMI for February is expected to come in at 53.2 versus the prior month’s 52.7, with the manufacturing and services PMIs forecasted at 51.4 and 53.0, respectively, compared to the prior month’s 51.2 and 52.9, respectively. The finalized February reading of consumer sentiment from the University of Michigan is expected to come in at 67.8, similar to prior reading, while one-year and 5-10-year inflation expectations are projected to come in at 4.3% and 3.3%, unchanged from the prior readings. Existing home sales are forecasted to have been at an annualized 4.13 million pace in January versus the prior month’s 4.24 million pace, corresponding to a decline of 2.6% versus the prior month’s increase of 2.2%.

In the central bank space, Fed Vice Chair Philip Jefferson is scheduled to speak today.

Mortgage rates were lower in the latest week. For the week ending February 20, the average 30-year fixed mortgage rate was down two basis points (0.02%) to 6.85%, versus 6.90% a year ago. The 15-year fixed mortgage rate decreased five basis points (0.05%) to 6.04%, versus 6.29% a year ago.

The Bloomberg 30-day visible supply fell $1.351 billion to $12.856 billion on Thursday, compared to the 12-month average of $12.031 billion.

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