U.S. Treasury yields hold ground before first debt auction of week

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U.S. Treasury yields held steady on early Monday’s trade before a key auction for short-term debt that could influence the direction of trading for the rest of the session.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.114%

was up 0.2 basis point at 1.109%, while the 2-year note rate
TMUBMUSD02Y,
0.136%

edged 0.2 basis point lower to 0.135%. The 30-year bond yield
TMUBMUSD30Y,
1.869%

was down 0.1 basis point to 1.862%.

What’s driving Treasurys?

New debt supply could put bearish pressure on government bonds. The Treasury Department will sell $58 billion of 3-year notes in the afternoon, the first of four sales for coupon-bearing Treasurys this week.

Ahead of auctions, primary dealers will try to bid up yields higher to ensure a successful sale and limit the share of bonds sold to them at the auction. As part of their obligations, primary dealers have to put in bids at every Treasury sale.

At the same time, the recent surge in bond yields could draw in bargain-seeking investors who want to lock in higher rates.

What did market participants say?

Markets will absorb “long end Treasury supply which appears poised to price at some of the most attractive yield levels in quite some time,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.



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