Sixty-Nine Billion for a Thirteenth Straight Auction, 49 Hours Before the Fed. The Size Was Never the Variable.
The Treasury sells sixty-nine billion dollars of two-year notes at 17:00 UTC today, 49 hours before an FOMC decision it is expected not to make.
That is the thirteenth consecutive two-year auction at exactly sixty-nine billion, so the size is not the variable - the clearing yield is the only free field in the row. The structural point a risk schedule usually misses: the Treasury announced four coupon securities on 22 October and they do not share an auction date, they share a settlement date. The two-year today, the five-year tomorrow, the two-year floating-rate note on FOMC day and the seven-year on Thursday all settle 2 November, which is the day after the United States leaves daylight time and the day before the midterms. Two price before the Committee speaks and one after. September's two-year cleared at 4.787 per cent with a tail of plus 0.2 basis points, so the implied when-issued is 4.785 - our subtraction, not anybody's published figure - and the tail field is blank for nine of the twelve prior auctions, so there is no distribution to size off. The note comes to auction roughly ten basis points below September's clear, 10.7 on one reader's 4.68 and 9.7 on another's 4.69. The French pre-registration from Sunday night resolves: the ten-year is 4.973, back under five per cent, seven and a half basis points below Friday. But one publisher calls the spread to Germany "above 155 basis points" where a dated series says 174.6 and 171.8, and the same page carries two German ten-year yields, 3.350 and 3.3774, which is a spread of 162.3 or 159.6 depending on which half of one page you read.