3Y Auction Preview: $40B Kicks Off June Sales

June's coupon auction schedule kicks off today with $40B 3Y note (91282CHH7), with the size unchanged from the previous sales this year.

• There is some risk implied with a short-end/intermediate auction just ahead of a FOMC decision, let alone one that could be influenced by Tuesday's CPI reading.
• But the 3Y comes relatively cheap by recent standards, coming into the sale at the highest yield since March 7 when it sold at a high 4.635% - just as Fed hike expectations were cresting, before trouble at Silicon Valley Bank and other banks started calling into question the extent of the tightening cycle.
• When-issued bid yield is currently 4.2647%, vs May's 3.695% high yield (which meant a tail-through of 2.8bp vs when-issued at the time of 3.723%, making it one of the strongest auctions of the month and the biggest stop-through for that tenor since 2009). The 5 auction average high yield is 4.038%, with other peripheral stats in the table below.
• The 3Y last tailed in February, which in turn was the first tail since October 2022.
• Timing: The 3Y note sale results will available shortly after the competitive auction closes at 1130ET.