Massive debt calendar in the US

The US Treasury will test demand for long-term bonds with auctions this week. The US Treasury is expected to borrow $125 billion this week. US Treasury bonds gained value last week after the Fed messaged that the improvement in inflation was insufficient but that interest rates would remain high for longer rather than hike, and after non-farm payrolls growth fell far short of expectations. While investors focused on Fed Chair Jerome Powell ruling out a rate hike, 2-year bonds, which are most sensitive to Fed decisions, led the increases. The US 2-year bond yield ended last week down about 18 basis points, while the yield on 10-year bonds fell by nearly 16 basis points. While investors are focusing more on short-term bonds, the US Treasury will test demand for longer-term bonds this week with auctions of $42 billion for 10-year and $25 billion for 30-year bonds. The government will also sell $58 billion of three-year bonds as part of three-month repayment auctions. The U.S. Treasury will borrow $125 billion this week. Mark Lindbloom, a portfolio manager at Western Asset Management, which manages about $385 billion, predicted that two- and five-year bonds will outperform longer-dated bonds after the jobs report and Powell’s comments. George Catrambone of DWS Americas said he preferred to hold two-year bonds “because the possibility of a rate hike is remote,” and that he has been “skeptical of the outer reaches of the curve for a long time.”