U.S. Treasuries found support in all tenors after the $45 billion 2-yr note sale met solid demand. The sale drew a high yield of 5.024%, which stepped through the when-issued yield by 0.4 bps, while the bid-to-cover ratio (2.94x) and indirect takedown (65.0%) were comfortably above average. The desk gave an A rating on the auction. This week brings some new supply. There is today’s $45 billion, 2-yr note auction, a $46 billion, 5-yr note offering later today, and a … Continue reading “Treasury Auctions 2-year Notes at 5.024%, Part of $133 Billion Fresh Bond Supply This Week”
Bond Traders Weekly Outlook: Yield Curve Pressured Ahead of September Data Drop
More financial conditions tightening this week as “risk on” has begun the transition to “risk off,” with the system now vulnerable to an abrupt change in the liquidity backdrop. The Treasury market gyrated all week. The 2-yr note yield trading range was 4.92% to 5.09% and settled the week at 5.05%, up 14 basis points for the week. 5.09% in Friday trading surpassing the March 8th (pre-SVB) peak to the high back to June 2007. The 10-yr note yield trading … Continue reading “Bond Traders Weekly Outlook: Yield Curve Pressured Ahead of September Data Drop”
Increased Supply Sees Lukewarm 20-year Treasury Bond Auction
U.S. Treasuries traded just below session highs after the just-completed $16 billion 20-yr bond auction despite it being met with lukewarm demand. The supply was $4 billion more than the last 20’s series. The sale drew a high yield of 4.499%, which tailed the when-issued yield by 0.9 bps. The bid-to-cover ratio (2.56x) was a bit below average (2.62x), as was indirect takedown (68.4% vs 71.2%). Much of the credit market move today has been a reaction to weaker global … Continue reading “Increased Supply Sees Lukewarm 20-year Treasury Bond Auction”
Bond Traders Weekly Outlook: Risk On to Risk Off Transition Feeding Emerging Market Contagion
Financial conditions tightened, “risk on” has begun the transition to “risk off,” with the system now vulnerable to an abrupt change in the liquidity backdrop. U.S. Treasuries closed out a turbulent a down week with a strong Friday rebound 2-yr notes reclaimed the bulk of this week’s loss as the long end continued its recent underperformance. Friday saw safe haven buying as there appears realization that China’s economy and its real estate sector in particular are of morose health. This … Continue reading “Bond Traders Weekly Outlook: Risk On to Risk Off Transition Feeding Emerging Market Contagion”
Bond Traders Weekly Outlook: Higher Yields Attracting Record Inflows into US Treasuries
Another vicious week for bond markets with Treasuries lower for the third week in a row as yields continued to rise. We also saw Moody’s downgrade regional banks following on from Fitch lowering U.S. debt from AAA to AA+. The higher yields have seen US Treasuries on course for a record year of inflows according to Bank of America. U.S. Treasuries belly led the market lower after the release of a hotter than expected PPI report for July on Friday. … Continue reading “Bond Traders Weekly Outlook: Higher Yields Attracting Record Inflows into US Treasuries”
Long Bond Fresh Low After Soft Demand at 30-year Treasury Bond Auction
U.S. Treasuries trading saw the long bond slip to a fresh low after the completion of today’s $23 bln 30-yr bond auction, which met soft demand. Shorter tenors remain a touch above their worst levels of the day. The sale drew a high yield of 4.189%, which tailed the when-issued yield by 1.4 bps, the bid-to-cover ratio (2.42x) was a touch above average (2.38x) and indirect takedown (67.8%) was shy of average (69.8%). The sale completed this week’s note and … Continue reading “Long Bond Fresh Low After Soft Demand at 30-year Treasury Bond Auction”
International Demand Solid at 10-year Bond Auction Ahead of CPI
US 10 and 30-yr Treasuries rose to fresh highs after the completion of today’s $38 bln 10-yr note auction, being met with solid demand. The high yield (3.999%) tailed the when-issued yield by 0.1 bps, however the bid-to-cover ratio (2.56x) was well above average (2.42x), as was indirect takedown (72.2% vs 65.0% average). The 2-yr note lags, just above its early low as the risk remains short end ahead of CPI tomorrow. Notably yesterday the $40 bln 3-yr note sale … Continue reading “International Demand Solid at 10-year Bond Auction Ahead of CPI”
Strong International Demand at 3-Year Treasury Bond Auction with High Yield 4.398%
The week’s auctions started off with solid demand for the $40 billion 3-year note sale which stopped 5s and shorter tenors from slipping to fresh lows, while 10s and 30s continued trimming their gains into the close. The short end saw buying in response to the completion of today’s $42 bln 3-yr Treasury note auction, which met solid demand ahead of tomorrow’s $38 bln 10-yr note sale. The sale drew a high yield of 4.398%, which stopped through the when-issued … Continue reading “Strong International Demand at 3-Year Treasury Bond Auction with High Yield 4.398%”
Bond Traders Weekly Outlook: Long End Adjusting to Rising Inflation and Increased Funding Needs
It was vicious week for bond markets this past week as yields continued to rise and then saw bust out moves after Fitch lowered U.S. debt from AAA to AA+. U.S. Treasuries finished the week rallying after the July jobs report. Ten-year Treasury yields rose 8bps for the week to 4.03%, after trading up to 4.20% Friday following the release of July payroll data. This was within two bps of the October 21st high, which was the peak yield back … Continue reading “Bond Traders Weekly Outlook: Long End Adjusting to Rising Inflation and Increased Funding Needs”
Bond Traders Weekly Outlook: Yields Squeeze Higher Following Fed Move
U.S. Treasuries ended the week higher note, pressuring yields from their highest levels in three weeks influenced by the effects of decisions by the Fed, ECB and the Bank of Japan’s relaxation of its yield curve control. The market received a sizable batch of data that reminded about stubborn but improving inflation with US core PCE and Germany in recession. The main driver of inflation in the cycle has been energy prices, crude oil settled at its best level since … Continue reading “Bond Traders Weekly Outlook: Yields Squeeze Higher Following Fed Move”