Updated on April 10, 2025 10:16:36 AM EDT

Yesterday’s 10-year Treasury Note auction went much better than many had thought. The benchmarks we use to gauge investor demand surprisingly showed a decent interest in the securities despite the recent bond sell-off and volatility. Results were posted at 1:00 PM ET, causing a minor improvement in the broader bond market. However, losses were already too significant to be able to be reversed by the results. Bonds did improve later in the afternoon, but it was not due to the auction. Furthermore, we get to do this all over again today when 30-year Treasury Bonds are sold and results are made available at 1:00 PM ET. Good news for mortgage pricing would be another strong sale.

Also released late yesterday were the minutes from last month’s FOMC meeting. They didn’t give us any major surprises. Most of the notes were about inflation, tariffs and uncertainty about the impact President Trump’s policies may have on the economy. The initial knee-jerk reaction was slightly negative in the bond market, but shortly after bonds resumed their upward move in price (lower yields) that continued into closing. As with the auction, the report had no meaningful impact on bond trading or mortgage pricing. It just happened to be released in the middle of a bond rally.

The big swing in the markets yesterday came as a result of President Trump pausing most of the recently issued tariffs for 90-days. It is interesting that this action was a rumor Monday morning that had a huge but temporary impact on the markets before being discredited by the White House. Yesterday that rumor became reality, at least for most of the tariffs, and led to stocks having a wild rollercoaster day. The difference between the lows and highs of the day in the Dow was 3,500 points and over 1,900 points in the Nasdaq. The benchmark 10-year Treasury Note yield ranged from a high of 4.46% to a low of 4.29%. This type of intraday volatility is rare, especially in stocks. We should see some stabilization over the next couple of days that will give a better picture of how the issue is impacting rates in the short-term.

Today’s big news was March’s Consumer Price Index (CPI) that showed consumer level inflation was softer than expected both on a monthly and annual basis. The overall CPI was expected to rise 0.1%, but slipped 0.1% last month, the first decline in this reading since May 2020. The more important core data that excludes volatile food and energy prices rose 0.1% when analysts were expecting a 0.3% increase.

The annual CPI numbers were even better news than the monthly figures. Year-over-year, the overall CPI fell from February’s 2.8% to 2.4% in March while core data went from 3.1% annually to 2.8%. Forecasts had them at 2.6% and 3.0% respectively. This report shows consumer level inflation slowed significantly, making it very good news for the bond market and mortgage rates. That said, it is important to note that the report does not yet include the effect tariffs will have on prices that consumers pay. It may be another month or two before we will get a true idea of how much they are affecting prices.

Last week’s unemployment figures were also posted early this morning, showing 223,000 new claims for jobless benefits were made. This pegged expectations and was an increase from the previous week’s 219,000 initial filings. Rising claims are good news for rates because they indicate weakness in the employment sector. However, the inflation data and tariff news are driving this morning’s bond trading, not this weekly snapshot.

Tomorrow brings us two more pieces of relevant economic data, one being the sister release of today’s CPI index. March’s Producer Price Index (PPI) is set for release at 8:30 AM ET tomorrow. It measures inflationary pressures at the wholesale level of the economy instead of the consumer level. Analysts are expecting to see a 0.2% increase in the overall reading and a 0.3% rise in the core reading with year-over-year numbers rising from February’s annual pace. As with almost all inflation data, weaker readings would be good news for bonds and may push mortgage rates lower.

The initial University of Michigans Index of Consumer Sentiment for April will close out this weeks calendar at 10:00 AM ET tomorrow. This index will give us an idea of consumer confidence that hints at consumers willingness to spend. Recent related releases have indicated consumers are less confident about their own employment and financial, meaning they are less apt to make large purchases in the near future. This is relevant because consumer spending makes up over two-thirds of the U.S. economy. Good news would be a sizable decline from Marchs 57.0 reading. Analysts are expecting to see a reading of approximately 55.0, signaling slightly weaker consumer spending activity may be coming in the near future. The lower the reading, the better the news for rates.

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