Treasury refunding announcement sees 10-year note sales rise $2 billion vs $3 billion exp

<ul><li>2 year auctions increase $3 billion/month</li><li>3 year auctions increase $2 billion/month</li><li>5 year auctions increase $3 billion/month</li><li>10 year auctions increase $2 billion/month</li><li>30 year auctions increase $1 billion/month</li><li>Total coupon sizes at $112 billion vs $114 billion expected (up $9b q/q)</li></ul><p>The Treasury said it expects one additional quarter of increased auction sizes beyond what's announced today.</p><p>Expectations I've seen:</p><ul><li>2 year auctions expected to increase $3 billion/month</li><li>3 year auctions expected to increase $2 billion/month</li><li>5 year auctions expected to increase $3 billion/month</li><li>10 year auctions expected to increase $3 billion/month</li><li>30 year auctions expected to increase $2 billion/month</li><li>Current portion of bills at 20.4%</li></ul><p>Goldman Sachs though is much lower seeing:</p><ul><li>2 year auctions expected to increase $2 billion/month</li><li>3 year auctions expected to increase $2 billion/month</li><li>5 year auctions expected to increase $2 billion/month</li><li>10 year auctions expected to increase $1 billion/month</li><li>30 year auctions expected to increase $1 billion/month</li></ul><p>Overall, the market is focused on less issuance than feared at the long end along with some clarity that the Treasury only plans to increase auction sizes once more. </p><p>There was more focus on this announcement than I've ever seen for Treasury refunding so we could see some angst come out of the market with long-dated yields falling on this.</p><p>Here's the instant analysis from BMO: "Our
takeaway from the new information was that the reintroduction of term premium
into the long-end of the curve was enough to give Yellen pause in being too
aggressive with long-end issuance increases"</p>

This article was written by Adam Button at www.forexlive.com.