After a 16 year lull, the Treasury auctioned off its 3rd 7 year note
auction of the year, a total of $26b, $2b higher than March and $4b
above Feb. With only two auctions to compare today’s to, the auction was
ordinary as the yield was a touch above expectations, the bid to cover
at 2.28 is slightly below the average of the previous two and the level
of indirects at 33% is right at the average of the previous two. This
auction caps the supply of the week but it’s just a temporary lull
before another chunk of supply next week which will include the
benchmark 10 yr and also the 30 yr. With longer term yields at the
highest levels since late Nov, the key focus of today’s FOMC statement
will be what their future plans are for the treasury buyback, stay put
with the $300b allocated or step it up in order to send a message to the
bond market that the Fed is serious about keeping (manipulating)
interest rates lower so as not to mess up their plans.
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