Treasury Action: the short end continues to outperform
Treasury Action: the short end continues to outperform, as it's done all day. Risk aversion has supported and has overshadowed the advent of supply. The Treasury announced a record $99 B in coupon auctions (increased by $3 B) for next week, including $33 B in 2-year notes, $36 B in 5-year notes and $06 B in 7-year notes. When issued yields are lower with the wi 2-year off 2 bps to 2.60%, while the wi 5-year is down 1.2 bps to 2.94%, and the wi 7-year is fractionally lower at 3.065%. Award rates here will be the highest in years, with the 7-year not having seen a 3% handle since April 2010. As with many prior auctions, demand is likely to be modest nevertheless in the face of another Fed rate hike next month and increased supply down the road. The rise in Libor has also made financing more expensive.