The US is set to sell $43 billion in 5-year notes at the top of the hour. The on-the-run 5s are trading up 8.4 bps today to 3.679%, which is close to a session high. A concession makes sense given yesterday's dreadful 2-year sale.
"Monday’s weak result for the 2-year auction revealed there is some hesitation to bid aggressively for the most Fed-sensitive part of the curve in the midst of the latest financial stability risks that have complicated the monetary policy outlook," wrote BMO's Ian Lyngen today.
