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Bond Market Commentary

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

March 17, 2023

Over in bond land, Treasuries are strengthening ahead of the opening bell Friday as investors digest the latest developments in the market. Market participants continue to fear the turmoil seen in the banking sector as some believe it may spread throughout the market. The heightened fear has pushed investors to seek out what are perceived to be safer investments, such as government bonds, further pressuring Treasury yields. The yield on the benchmark 10-year note is down five basis points (0.05%) to 3.52%, while the 30-year bond yield is decreasing five basis points (0.05%) to 3.66%. The yield on two-year note is declining three basis points (0.03%) to 4.13%. On Thursday, Treasuries weakened as bond volatility surged to levels not seen since the 2008 Financial Crisis amid limited liquidity. The yield on the benchmark 10-year note increased 11 basis points (0.11%) to 3.57% while the 30-year bond yield added six basis points (0.06%) to 3.71%. The yield on the two-year note, which is more sensitive to changes in monetary policy, gained 24 basis points (0.24%) to 4.16%.

On the data front, February’s industrial production is forecasted to slightly increase to 0.2% from January’s stagnant 0% reading while the Conference Board Leading Economic Index’s reading for February is estimated to remain at a 0.3% decline. Rounding out today’s docket, March’s preliminary reading of the University of Michigan Consumer Sentiment Index is expected to remain unchanged at 67 along with short-term and long-term inflation remaining at 4.1% and 2.9%, respectively.

Mortgage rates pulled back in the week ending March 16 after five consecutive weeks of increases amid turmoil in the financial markets. The average 30-year fixed-rate mortgage lost thirteen basis points (0.13%) to 6.6% versus 4.16% a year ago and compared to a record low of 2.65% set in January 2021. The 15-year rate declined five basis points (0.05%) to 5.9%, in contrast to the 3.39% level at this time last year.

Municipal Market Commentary

The Bloomberg 30-day visible supply fell $894 billion to $7.682 billion on Thursday, below the 12-month average of $9.0 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. Additional information available by request.

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