Treasury Action: supply is heavy and could keep yields biased higher
Treasury Action: supply is heavy and could keep yields biased higher and steeper this week. Treasury is selling $56 B in coupons, including $24 B in 3-year notes, $20 B in 10-year notes, and $12 B in 30-year bonds. Plus, there is $138 B in bills on tap today. Due to this week's holiday, the 3s and 10s are both slated for Wednesday (the bid deadline for the former is 11:30 ET, with the latter at 13:00 ET), and the doubling up may make for difficult auctions. However, yields are backing up smartly, with the when issued 3-year at 1.04% and the 10-year at 1.775%. Stops there would be the cheapest levels since early in the year. The 3s-10s spread has widened a couple of basis points to 75 basis points, from 70 basis points last week, with the 10s-30s at 74 basis points from 71 basis points last week. The question is whether those yields are high enough to entice demand amid worries over a rising rate environment. Today's German Bund offering today found only moderate sponsorship.