PREVIEW: US to sell USD 41bln 10-year notes at 13:00 EST/18:00 GMT

SUPPLY: The Treasury will auction a new 3-year note (USD 54bln, Monday), a new 10-year note (USD 41bln, Tuesday) and a new 30-year bond (USD 27bln, Thursday); this week, some USD 120bln of cashflows fall due, including USD 78bln of redemptions and USD 42bln of coupons. UBS also notes that the Treasury will next week auction a new 20-year bond (18th Nov, size expected around USD 27bln), and in the month-end auctions, will auction a new 2-year note (23rd Nov, expect USD 56bln), a new 5-year note (23rd Nov, expect USD 57bln) and a new 7-year note (24th Nov, expect USD 56bln); the week beginning 30th November will see around 105bln of cashflows falling due.

10-YEAR PREVIEW: Analysts at SocGen say that the 10-year sector is not sending a clear signal from a relative value perspective. It notes that the 2s10s (and 3s10s) part of the Treasury curve has steepened significantly after the vaccine update from Pfizer on Monday which makes the 10-year part of the curve more attractive than the 3s sector. Additionally, on an outright basis, the sector looks cheap compared to recent auctions, the bank writes. All 10s auctions since October 2019 have seen increasing average demand from foreigners, while demand from funds has decreased. "Increased yield pick-up, especially in the long end, is expected to uphold demand from foreigners," SocGen says, "however, an increased auction size (by USD 3bln since last auction) could negatively affect demand in the auctions." 

10-YEAR AUCTION RECENT HISTORY:

• High-yield: (prev. 0.765%, six-auction average 0.722%)


• Tail: (prev. 0.0bps, six-auction avg. -0.1bps)


• Bid-to-cover: (prev. 2.48x, six-auction avg. 2.46x)


• Dealers: (prev. 22.9%, six-auction avg. 23.6%)


• Direct: (prev. 14.2%, six-auction avg. 14.3%)


• Indirect: (prev. 62.9%, six-auction avg. 62.1%)

10 Nov 2020 - 17:45- Fixed IncomeResearch Sheet- Source: Newsquawk