Treasury 10-year reopening preview:
Treasury 10-year reopening preview: yields pulled back from highs following the solid foreign demand for the $24 B 3-year sale and that has stolen about 3 basis points of concession from the 10-year, though foreign buyers may be attracted to the long-end ahead of the FOMC as financial conditions models have shown the Fed tightenings have resulted in net easier conditions. The WI-yield is near 2.195% compared to the current yield near 2.19% for the $20 B sale. It is clear that central bank and foreign investors see some relative value here compared to negative yields in other major markets as the yield spread with Bunds eyes -200 bp. Indeed, inflation is still not too threatening, especially with the strengthening in the dollar and the weaker commodity prices. The May auction stopped at 2.40% and saw a tepid 2.33 cover (2.47 average) and a 60.7% indirect bid (64.6% average). Direct bidders took 5.1% last month, while primary dealers were awarded 34.2%. This one should fare better.