Treasury Action: the 5-year note has turned special in the repo market
Treasury Action: the 5-year note has turned special in the repo market, joining the 2-year. The latter trades at -1.40%, versus -1.60% yesterday, with the 5-year now at -0.90%, versus -0.40% Monday. The specialness in the 10-year, which was at 0% yesterday, has come off ahead of the February 15 refunding settlement. It was in the -0.80% area late last week. Also reflecting the scarcity of some of the issues in the Treasury market is the increase in fails to $159 B, reported for yesterday, the highest since mid-December. The Treasury announces the next batch of 2-, 5-, and 7-year notes on Thursday, and increases in volumes are expected for all, with the increased supply expected to alleviate repo specialness.