Treasury 3-year auction preview:
Treasury 3-year auction preview: the market is quiet ahead of the $38 B sale, having recovered from early losses. After cheapening since the strong jobs report, the wi is little changed at 1.850%. The market has priced out the 50 bp rate cut, and seems comfortable with current expectations for a 25 bp easing. However, analysts suspect the event risk with Fed Chair Powell's testimony tomorrow will make for a sloppy and disappointing auction, especially as there's now little concession in the note. The when issued rate is fractionally higher at 1.855%, with the benchmark as rich as 1.675% on June 25. Nevertheless, a stop here would be the lowest going back to November 2017. The note isn't all that attractive on the curve, though the yield should appeal to foreign accounts as it trades at a 262 bp yield pick-up to the German note. The June auction was well sponsored amid Fed rate cut expectations, stopping at 1.861% and garnering a 2.62 cover (2.56 average) and a 56.6% indirect bid (45.8% average). Direct bidders took 13.4%.