Adjectives used to describe yesterday’s $42 billion auction of the 10-year Treasury were “pretty terrible,” “poor,” and “very discouraging” given that the benchmark was “cheapened up” before the auction.
Some are fearful that this is a harbinger of auctions to come given the incessant demand for monies in an environment that is unquantified for a myriad of reasons.
Today is an auction of $25 billion of the 30-year Treasury. Will “The Street” find itself overly bullish on the Treasury market?
Also today is the unprecedented auction of $100 billion of 4-week Treasuries. The auction is expected to be a non-event.. The market has discounted over 60 bps of easing by year’s end up from about 28 bps before last week’s payroll report.
There are some that are suggesting a 50-bps cut can occur at the September meeting with a total of three interest rate reductions by December 31, perhaps the result of the Federal Reserve Bank President of Minneapolis’s comment that “an interest rate cut is perhaps appropriate in the near term.”
How realistic is this outlook?
Equites were unfazed by the poor 10-year Treasury auction which caused a steepening across the yield curve. AAPL led the largest companies higher following the President’s announcement that this behemoth will invest $100 billion on a domestic manufacturing plant.
Moreover, earnings for the S & P 500 companies are crushing it, rising 9.1% almost triple the pre-season forecast and the strongest beat rate since 2021 according to Bloomberg.
What will happen today?
Last night the foreign markets were up. London was down 0.71%, Paris up 1.25% and Frankfurt up 1.61%. China was up 0.16%, Japan up 0.65% and Hang Seng up 0.69%.
Futures are up about 0.5% on hopes of a Russia-Ukraine truce. The 10-year is off 1/32 to yield 4.25%.
