Treasurys Slip for Third Straight Trading Session Ahead of 3-Year Auction

U.S. Treasurys for the third straight trading session fell briefly on Tuesday as investors prepare for a multi-billion three-year auction.

“The Treasury Department will auction $32 billion of 3-year notes at 1 p.m.,” MarketWatch reports.  “The 3-year 3 YEAR +3.25% yield, which moves inversely to prices was less than 1 basis point, or 1/100 of 1%, higher at 0.344%.”

Three-year bond quote.

“The 10-year note 10 YEAR +1.53%  was 1.5 basis points weaker on the day at 1.778%, while the 30-year bond 30 YEAR +0.74%  was 1 basis point weaker at 2.992%, and the 5-year note 5 YEAR +1.76%  was 1 basis point weaker at 0.748%,” the report adds.

Treasurys started to slide a little on Friday after the U.S. Bureau of Labor Statistics released April’s unemployment numbers. The numbers continued to slip through Monday’s trading session.

But although economic data has a certain impact on pricing, “the Treasury market has been largely range-bound over the last month and a half, said Jeremy Hill,” managing director of TF Market Advisors told MarketWatch.

“The Treasurys market is not going to be driven by technical algos taking over. It’s more of an investors’ range,” he said.

“The bigger change since mid-March has been less linear risk-on, risk-off,” he added.

The auction should attract an average level of activity, he noted.

However, as Richard Gilhooly, U.S. director of interest rate strategy at TD Securities, notes in the MarketWatch report, rate could see an increase afterwards.

“We would expect more upward pressure on rates and curve after the 3yr as the market prepares for 10s and bonds,” he said.

Thirty and 10-year bond quotes.

"The Treasurys will auction $24 billion 10-year notes on Wednesday and $16 billion in 30-year bonds on Thursday," the report adds.

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