Treasuries Finish Sharply Lower

A powerful stock rally, and anticipation of excess supply from the government's $27 billion two-year note auction pulled down Treasury prices

Stocks continuted to bolt on gains Monday, taking some more starch out of prices along the Treasury curve. This transpired despite the fourth consecutive monthly drop in leading indicators, which fell 0.2% as expected. Supply was the dominant feature, with the $27 billion two-year note auction meriting a little back-up in yields at the front-end. This cheapening looked set to continue and was exaggerated by the stock market rally, propelling two-year yields up over 15 basis points by the close to 2.16%.

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