On the heels of the Brainard and Harker comments, the 3 yr note auction, of course sensitive to expectations for Fed policy, was a touch above average. The yield was a touch below the when issued while the bid to cover of 2.87 was slightly above the one year average of 2.80. Direct and indirect bidders took 62.4% of the auction vs the 12 month average of 61%.
Bottom line, on all 3 main metrics, the auction was decent and better than neutral. We have key Fed members that are becoming more reluctant to move again anytime soon with a rate hike and either don’t want to admit or actually think that QT is no big deal. Rate hike odds for September are only at 26%.