5Y Treasury Auction Today To Reveal Market Intentions

After the Fed ruffled markets in the past week, the Treasury’s 5-year note auction Wednesday should get more attention than usual as traders watch to see whether the prospect for higher rates has been fully priced in.

There is a key 1 p.m. ET auction of $35 billion in 5-year notes, a part of the curve where yields moved dramatically higher after last week’s Fed meeting. That narrowed the gap with 30-year bond yields to the tightest spread since 2009 on expectations by some traders that higher rates at the short-end will now come sooner than expected.

Traders also said that many bond funds were long the 5-year note, and were forced to quickly reposition.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza