U.S. Treasuries edged higher Monday as some corrective trade pushed through following the rout in the wake of the surprise U.S. elections which left the 10-year settled at the highest yield/lowest price levels since December after hitting July 2015 lows Friday. The upside may be kept in check with a run of Treasury auctions which will be stuffed into the holiday-shortened week starting with a two-year sale at 1 p.m. ET.
The 30-year recently traded at 2.995% from an overnight high of 2.983% and close near 3.015% Friday. The 10-year was 2.317% from a 2.335% close and an overnight high of 2.303%, after getting the biggest two-week rout since 2001. The five-year is near 1.767% from 1.7507% overnight and a 1.78% close. The two-year recently slipped lower to near 1.064% versus 1.044% overnight and a close near 1.055%.
The curve trade has seen the sharp, post-elections steepening unwound some with the yield spread between the two- and 10-years flattened to 1.22 plus from 1.28 Friday while the five- and 30-year yield gap tightened to 1.22 from 1.23 plus.
Traders are watching how the week’s auctions will be received, specifically by foreign buyers, in front of higher inflation expectations and added debt in an environment of increased fiscal spending and lower taxes. The $26 billion two-year auction is being approached with caution following a poorly received October sale which saw low overall demand and falling foreign interest.
Supply crowding the calendar $34 billion five-years as well as $13 billion reopened two-year floating-rate notes (FRN)Tuesday and $28 billion seven-years Wednesday.
The pace of corporate issuance is expected to slow in the holiday week (which includes a full close Thursday and early close Friday with desks lightly staffed). BP Capital has a benchmark seven- and 12-year offering. Enbridge Inc is selling benchmark 10- and 30-years. Bank of America plans an 11-year maturity. New York State Electric & Gas has a $500 million 10-year.
Treasury will offer details on Tuesday’s four-week bill auction at 11 a.m. ET and sell $39 billion three- and $33 billion six-month bills at 11:30 a.m.
The session offered the October Chicago Fed national activity index, which held in negative territory, dropping 0.08 points after falling 0.23 points in September and 0.52 points in August.
Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with MarketBeat.com’s FREE daily email newsletter.