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Treasury Action: supply heats up next week

Treasury Action: supply heats up next week, joining a mass of data. The only thing missing will be scheduled Fedspeak. Treasury is selling $88 B in coupons, and about $100 B in bills. On tap are $26 B in 2-year notes and $34 B in 5-year note on Monday and $28 B in 7-year notes on Tuesday. With the month-end settlement on Thursday, the debt managers had to condense the coupon sales into the start of the week, and hence the doubling up on Monday. That's limited demand in recent such auctions and may do here again too. Additionally, the rally today after Yellen didn't push back on market expectations for no further rate hikes this year has seen when issued rates tumble. The wi 2-year has slipped slightly to 1.340%, with the 5-year down over 2 bps to 1.750%, while the 7-year is off over 3 bps to 1.990%. A stop here on the 2-year note would be one of the cheaper levels in years. That, and beliefs the Fed is on hold come make for a decent auction. But, for the 5s and 7s, these are some of the richest rates in many months, which could limit buying at the margin. However, month-end demand could provide some underpinnings.


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