Treasury 10-year reopening preview: the sale should go well
Treasury 10-year reopening preview: the sale should go well after yesterday's strong 3-year auction, and following the low CPI reading. However, the when issued yield has richened further, and is down 2.5 bps to 2.125%. That's 35 bps below the May stop, and would be the lowest since November 2016. That could be a hurdle for the auction. Nevertheless, the tame price data and expectations for Fed easing remain supportive for the note. It's mixed on the curve. The note is also moderately tight in the repo market, suggesting a short covering bid. Plus, it carries an attractive 236 bp yield pick up to the Bund (Germany, Portugal, and Greece sold 10-year notes at record low rates earlier, with good demand). The May auction was very poor. It was awarded at 2.479% and saw a 2.17 cover (2.48 average), the lowest since March 2009. The 53.3% indirect bid (62.9% average) was the worst since April 2018). Direct bidders took 11.5%.