Treasury Action: supply hits and should keep bond yields elevated
Treasury Action: supply hits and should keep bond yields elevated. Treasury is selling $24 B in new 3-year notes (11:30 ET bid deadline) and $20 B in reopened 10s in the afternoon (13:00 ET). There is some concession building this morning with the when issued 3-year note almost 2 basis points higher at 1.045%, with the 10-year up 3 basis points at 1.800%. These are the cheapest rates since early in the year when Fed rate hike fears were also in play. Whether current rates will be attractive to buyers is the question. Demand for Treasuries has been spotty, though there has generally been support from overseas accounts thanks to the big yield differential, and with negative rates on many shorter maturities abroad. The market will have to place its bids on the notes before the release of the FOMC minutes, but that shouldn't be too problematic as hawkish bent is well known. However, curve steepeners are in play as inflation worries are picking up, and that may limit interest in the 10-year.