BMO Eying 5-Year Supply For "Market Lean" Ahead Of Powell

BMO note that "the 2-Year auction was met with a reasonable reception and given the link between 5-Year yields and liftoff expectations we'll be closely watching Tuesday's Treasury auction for any indication of a market lean ahead of Powell's press conference. The consensus remains for little change in the statement or forward guidance; save an acknowledgment of the risk the pandemic will go into extra innings. This implies that a strong takedown of 5s will reflect investors' expectations the Chair will be more dovish than recent appearances. However, a weaker reception can't so easily be interpreted as the opposite given the outright level of yields and the baseline risk-event considerations (i.e. why not wait until after the Fed is out of the way to add 5s)."