Treasury Three-Year Note Sale Tests Investor Appetite Before Fed
- Yield approaches highest since 2011 in pre-auction trading
- Futures show 78 percent probability of rate increase next week
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Demand for shorter-term debt faces a test as the Treasury sells $24 billion of three-year notes for the last time before policy makers meet next week to decide on raising interest rates.
The notes traded before the sale at close to the highest auction yield of the securities since 2011. Shorter-maturity Treasuries are more sensitive to what the Federal Reserve does with its main policy rate, the target for overnight loans between banks, than longer-dated bonds. Longer-term U.S. debt fluctuated as crude oil rebounded after dropping to an almost seven-year low.