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Weak 5Y Auction Spurs late Tsy Selling

US TSYS

Rates trade weaker after the bell, near middle of session range, late block buying 5Y futures (+12,635 FVM2 111-03.25) helped yld curves finish steeper, but well off early highs: 2s10s +1.202 at 7.072%, 5s10s still inverted at -6.039. Average overall volumes expected to thin out ahead extended 4Th of July holiday weekend.

  • Limited react to stronger than expected pending home sales +0.7% vs. -3.9%, YoY comes in weaker than the prior month at -12.0%, vs. -11.5% prior. Slight dip in rate futures after Durable New orders +0.7%, ex-trans: +0.7%.
  • Stocks reversed early gains -- coincided with dip in crude at the time, WTI trades -1.56 at 106.06 a few minutes after extending high of 108.69 in early trade. WTI regained footing in second half tapping 110.44 high before slipping back to 109.50 (+1.88) after the FI close.
  • Weak Tsy auctions, particularly 5s weighed on rates:
    • Mildly weak 2Y sale, Tsy futures holding near middle of lower session range (curves steeper) after $46B 2Y note auction (91282CEX5) tails: 3.084% high yield vs. 3.077% WI; 2.51x bid-to-cover vs. last moth's 2.61x.
    • Tsy futures sell-off after weak $47B 5Y note auction's (91282CEW7) tail: 3.271% high yield vs. 3.237% WI; 2.28x bid-to-cover vs. 2.44x last month.
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Rates trade weaker after the bell, near middle of session range, late block buying 5Y futures (+12,635 FVM2 111-03.25) helped yld curves finish steeper, but well off early highs: 2s10s +1.202 at 7.072%, 5s10s still inverted at -6.039. Average overall volumes expected to thin out ahead extended 4Th of July holiday weekend.

  • Limited react to stronger than expected pending home sales +0.7% vs. -3.9%, YoY comes in weaker than the prior month at -12.0%, vs. -11.5% prior. Slight dip in rate futures after Durable New orders +0.7%, ex-trans: +0.7%.
  • Stocks reversed early gains -- coincided with dip in crude at the time, WTI trades -1.56 at 106.06 a few minutes after extending high of 108.69 in early trade. WTI regained footing in second half tapping 110.44 high before slipping back to 109.50 (+1.88) after the FI close.
  • Weak Tsy auctions, particularly 5s weighed on rates:
    • Mildly weak 2Y sale, Tsy futures holding near middle of lower session range (curves steeper) after $46B 2Y note auction (91282CEX5) tails: 3.084% high yield vs. 3.077% WI; 2.51x bid-to-cover vs. last moth's 2.61x.
    • Tsy futures sell-off after weak $47B 5Y note auction's (91282CEW7) tail: 3.271% high yield vs. 3.237% WI; 2.28x bid-to-cover vs. 2.44x last month.