The $26 billion note sold at 3.009%, the highest since May 2011. Ahead of the auction, the notes were trading at 3.010% in the when-issued market.
Benchmark yields have moved up across the curve since the auction but there hasn’t been a reaction from the dollar. Over time, higher yields could be a powerful driver for the dollar. US 10s are trading 110 basis points higher than German 10s, 230 bps above Japanese 10s and 28 bps above Canadian notes.
The euro still has some powerful support from periphery inflows but with Italian yields whittled down to 3.88%, that’s unlikely to be a factor moving forward.