This afternoon, the Treasury will auction debt expiring in two years. It’s an interesting setup since the debt is most sensitive to Fed rate-cut projections, and those have moved a lot over the past few days.
Federal Reserve Chair Jerome Powell’s speech last Friday boosted expectations for a September rate cut, and with that the 2-year Treasury note price went higher. Yields move in the opposite direction of prices, and so the 2-year yield moved lower.
Against this backdrop, the Treasury is set to auction $69 billion worth of 2-year debt. In July, investors bought the 2-year note at a high yield of 3.920% –today the market is trading well below that level.
www.barrons.com
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