Treasuries reversed trend today as the long end outperformed for the first time in two weeks thanks to Fed buying in the seven- to ten-year range. The two-year finished the day down 3/64, and the ten-year was higher by 1/64. The benchmark curve was flatter by 3 basis points on the day, and currently sits at +221.5 basis points. A basis point represents .01%.Treasuries were quiet today as the market prepares for this week’s hefty supply ($71 billion in three-, ten- and thirty-year maturities). The market has been concerned about the supply problem for a quite a while now and has sold off as a result. If auction results show any appetite for Treasuries at these yields look for the curve to flatten 15-20 bps with a ten-year yield in the 2.95-3.05% range.
The Fed purchased $8.5 billion in Treasuries ranging in maturities from 2/29/16 to 2/15/19. This brings net total Fed Treasury purchases to $85.3 billion. The Fed intends to buy Treasuries again on Wednesday.
Have a great evening.
Cliff J. Reynolds Jr., Junior Analyst
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