Treasury Action: supply is heavy today with the 3- and 10-year auctions
Treasury Action: supply is heavy today with the 3- and 10-year auctions. The bid deadline on the former is at 11:30 ET, with the latter at 13:00 ET. There haven't been many occasions where auctions have doubled up, but they've often been to the detriment of one of the offerings. When issued yields are slightly lower, continuing to recover from last week's selloff, with the wi 3-year at 1.660% and the wi 10-year at 2.3450%. A stop here on the 3-year would be the highest rate since April 2010. But that might not be cheap enough to bring in much demand given the FOMC's on a normalization path. The note is special in repo, and that could engender a decent short covering bid. Meanwhile, the wi 10-year rate would be the highest stop since May. And here too, that may not be sufficient for prospective buyers given some signs of brewing inflationary pressures. Indirect bidding should be decent for both, however, as spreads are still wide and attractive. The September 3-year stopped at 1.433% with a 2.70 cover (2.82 average) with a 46.2% indirect bid (52.5% average). The $20 B September 10-year reopening stopped at 2.180% and saw a 2.28 cover (2.41 average) and a 55.3% indirect bid (62.0% average).