Bond Traders Look to Treasury Refunding, Fed Speakers and Jobs

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(Bloomberg) — US bond traders will focus on this week’s announcement of the Treasury Department’s borrowing plans for the next three months, an array of Federal Reserve speakers and a loaded calendar of economic releases crowned by monthly employment data.

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Treasury yields are near the upper end of their range of recent weeks, with crude oil prices not far from a four-year peak and economic data pointing to a resilient US economy. With the Middle East conflict keeping energy costs elevated and sparking inflation concerns, the bond market has essentially priced out interest-rate cuts for this year, and options traders have even begun to lean toward potential tightening in 2027. 

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The US likely added 60,000 non-farm jobs last month, according to a survey of economists by Bloomberg, down from a surprisingly strong March figure of 178,000 that was seen as reducing the need for Fed easing. The unemployment rate is forecast to hold steady at 4.3%. 

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“The unemployment rate is not increasing anymore and the way it was last year, so there’s a pretty good sense that we don’t need to create a lot of jobs to keep that stable,” said Ed Al-Hussainy, portfolio manager at Columbia Threadneedle Investments. 

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Traders will likely also pay close attention to remarks from Cleveland Fed President Beth Hammack, one of three dissenters at last week’s Fed meeting. The trio, which included Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan, said they dissented over the central bank’s policy statement because it was no longer appropriate to signal the Fed’s next move was still likely to be a cut.

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On Wednesday, the US Treasury is expected to say that it plans to retain the size of its quarterly refunding — the combined tally of next week’s 3-, 10-, and 30-year auctions  — at $125 billion. 

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For the past couple years, US debt managers have said they anticipate keeping auction sizes unchanged for nominal notes, bonds and floating-rate notes, “for at least the next several quarters.” Some Wall Street dealers don’t rule out a shift in the outlook for coupon sizes over time given worries arond the US government’s fiscal trajectory.

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“A possible change would be dropping ‘at least’ while retaining the expectation for unchanged coupon sizes over ‘the next several quarters’” said strategists at Deutsche Bank. “Accordingly, we now expect nominal coupon increases beginning in February 2027.”

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What to Watch

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• Economic data:

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• Fed calendar:

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• Auction calendar:

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