Treasury’s 20-Year Reboot Drives Troubleshooting Across Curve
- Dealers don’t anticipate other auction sizes getting slashed
- Market’s initial reaction to announcement is to steepen curve
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The U.S. Treasury’s plan to reboot its 20-year bond clarified how the government will fund a $1 trillion deficit, but also raised questions about the decision’s ramifications elsewhere in the market.
Traders took a stab at providing some answers in the immediate aftermath, reshaping the yield curve. The extra yield on 30-year bonds versus 2-year notes rose almost 3 basis points on Friday, the biggest increase since late December.