Treasury 3-year auction preview:
Treasury 3-year auction preview: the $24 B auction risks coming in on the soft side due to the proximity of the FOMC decision and updated projections, which could chase a few marginal investors away for the time being. The wi-yield on the new paper is trading at 1.51%, compared to the current yield near 1.497% -- close to session highs, helping out with a small concession. Potential central bank buying (China has expressed interest in resuming purchases) could see some demand over the 1.50% level, while foreign demand may remain resilient if the face of wobbles in the tech sector and still wide spreads with many shorter sovereign rates still in negative territory. The May auction was disappointing with a 1.575% award rate, a 2.76 cover (2.80 average) and a 50.8% indirect bid (51.4% average). Direct bidders took 9.3% last month while primary dealers accepted 39.9%.