Attention on US Treasury's heavy borrowing calendar

At a time when bond yields are rising due to the postponement of Fed rate cut expectations, all eyes will be on the US Treasury bond auctions. While US bonds are on track to leave their worst month of the year behind in April, investors who are already nervous about Fed expectations and tensions in the Middle East will also have to monitor the US Treasury's borrowing calendar. The US Treasury will hold a $69 billion 2-year bond auction on April 23, a $70 billion 5-year bond auction on April 24, and a $44 billion 7-year bond auction on April 25. While the size of the 2- and 5-year bond auctions are at record levels, the US Treasury will have borrowed a total of $183 billion in one week. The 2-year US bond yield closed last week at 4.99 percent. Therefore, the yield at Tuesday's auction could reach 5 percent for the first time since last year. Before last year, this level had not been seen in more than 10 years. Investors have been buying short-term bonds since the 5% yields hit them after Fed Chair Jerome Powell’s message that interest rates would be cut later than expected, according to Jack McIntyre of Brandywine Global Investment Management, and Powell’s message may have caused bond prices to bottom out. McIntyre predicted that yields would climb again if the Fed backed off too early on inflation and cut interest rates too early.