Bond Market Commentary

Over in bond land, Treasury yields are higher before the opening bell Thursday as President Donald Trump introduced a 25% tariff on auto imports to support U.S. manufacturing, set to begin April 3 for completed vehicles. President Trump also indicated the possibility of additional tariffs on the European Union and Canada if they acted jointly in an adverse manner against the U.S. Investors are also looking forward to today’s economic releases, including the third reading of fourth-quarter gross domestic product (GDP) and inflation, along with the latest unemployment claims data. As of 6:50 AM ET, the yield on the 10-year note is rising four basis points (0.04%) to 4.39%, while the 30-year bond yield is also increasing four basis points (0.04%) to 4.74%. The yield on the two-year note, which is more sensitive to changes in monetary policy, is up one basis point (0.01%) to 4.03%.

Treasury yields were higher on Wednesday as the preliminary reading of durable goods orders for February unexpectedly showed a pickup in activity. The yield on the 10-year note was up four basis points (0.04%) to 4.35%, while the 30-year bond yield also rose four basis points (0.04%) to 4.70%. The yield on the two-year note increased one basis point (0.01%) to 4.02%.

On the data front, the third readings of fourth-quarter GDP, GDP Price Index, core Personal Consumption Expenditures Price Index, and personal consumption are expected to come in at annualized growth rates of 2.3%, 2.4%, 2.7% and 4.2%, respectively, all unchanged from the prior readings. The preliminary February reading of wholesale inventories is expected to show an increase of 0.7% month-over-month (MOM) versus the prior month’s increase of 0.8%, while retail inventories are forecasted to have risen 0.6% MOM in February versus the prior month’s decrease of 0.1%. Initial jobless claims for the week ending March 22 are expected to rise to 225,000 from the prior week’s 223,000, while continuing claims for the week ending March 15 are expected to slightly decrease to 1.886 million from prior week’s 1.892 million. Pending home sales for February are expected to have increased 1.0% MOM and declined 3.5% year-over-year (YOY), versus the prior month’s declines of 4.6% and 5.2%, respectively. The Federal Reserve (Fed) Bank of Kansas City will release their manufacturing survey for March, with the Composite Index expected to come in at negative 5, similar to prior month’s reading.

In the auction space, the U.S. Treasury is set to issue $75 billion in four-week bills, $75 billion in eight-week bills and $44 billion in seven-year notes.

In the central bank space, Richmond Fed President Tom Barkin and Boston Fed President Susan Collins are scheduled to speak today.

The Bloomberg 30-day visible supply fell $1.332 billion to $10.804 billion on Wednesday, compared to the 12-month average of $12.344 billion.

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