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March 27, 2017 By Peter Boockvar

2 yr note auction and what it says

The 2 yr note auction was decent. The yield of 1.261% was about in line with the when issued. The bid to cover of 2.73 was a touch above the previous 12 month average of 2.68. Direct and indirect bidders took almost 64% of the auction vs the one year average of 58%. This auction comes with the 2 yr yield at the lowest in a month.

Bottom line, this part of the curve is highly sensitive to expectations of Fed policy and the fed funds futures has another fully priced in rate hike at the September press conference. As for the June press conference meeting, odds are about 50/50. As for another 2 hikes this year, odds are also around 50/50. I do have to say that the Fed deserves some credit in not altering their official economic growth forecasts until AFTER they saw what fiscal policies would actually get passed, obviously in light of what we saw on Friday and the reduced expectations for tax reform to come. That said, 3 hikes in their dot plot didn’t assume any quicker growth so we still may get 2 more. That will most likely be determined by where the S&P 500 is trading at the time.

 

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About Peter

Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.

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Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

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