Treasury Action: yields remain moderately higher
Treasury Action: yields remain moderately higher as risk-on flows into equities help the bond market set up for this week's $64 B in coupon actions. The wi 3-year note is up 2 bps to 2.435%, with the 10-year 3 bps higher at 2.805%, with the bond up 1.5 bps to 3.040% (the 10s and 30s will be reopenings). These would be some of the cheapest award rates in years. Indeed, the 2.436% on the March 3-year was the highest since May 2007. For the 10-year, the last two award rates have been over 2.80%, a handle which had not been topped since January 2014. And for the bond, the history is not that long given the March and February award rates both topped 3.1%, though with a 3-handle for the first time since May 2017. While almost all of the March auction results were above average, they were only modestly so, and bid covers and indirect bidding have clearly dropped off since mid- to late 2016. The surge in equities since the presidential election and the shift out of safe-haven Treasuries, along with the FOMC's normalization posture, have made for relatively lackluster auctions. Additionally, expectations for more rate hikes, as well as increased supply, have also weighed on demand.