The Daily Update: Treasury issuance & data

A rather subdued day yesterday for markets as the US Treasury issued a further $60bln in two year notes and a further $61bln in the five year, yields moved up slightly as the buy side allocation was the lowest since November 2020 in the two year while the buy side was the highest since October 2020 in the five year. The Fed also continued to focus their purchases in the twenty year sector with $3.6bln of purchases, this is a continuation of a trend which has been in place since late January when they briefly moved down to the ten year for a short period. The Fed split their purchases across the curve but in the 7 to 20 year sector the 20 year maturities continue to see the bulk of their attention indeed they are buying around 7bln a month in the 20 year maturities. Today we have further supply with $28bln in two year FRN’S and $62bln in seven year notes as laid out in the Treasuries refinancing schedule, could be why yields moved higher into the close across the curve.

On the data front we had the first big miss in a while as March Durable goods orders came in at just 0.5% against 2.3% expected. However, the transportation sector accounts for most of the disappointment but observers are moving down their GDP forecasts for Q1 as business investment in equipment appears lower than first expected. On the reverse of this the Dallas Fed Manufacturing index jumped to 37.3 versus 30 expected and 28.9 prior reflecting a continuation of improvement in the manufacturing sector. The Richmond Fed will release their Manufacturing index later today with a further pickup expected as well as consumer confidence for April again the calls are for stronger data.