Today's Treasury auction wasn't good news for risk assets or the Japanese Ministry of Finance.
The yield was 1.8 bpd above what was expected, despite a solid concession in the hours leading up to the sale. The US sold $35 billion and the market is seemingly finding those kinds of numbers tough to digest. Every sale since February has been above the yield the market was expecting and the Treasury is likely to announce even-higher auction sizes in November due to deficits.
Looking at the broader Treasury market today, yields are now flat at the 5-year tenor at 4.61% from a low of 4.54%.
I'm fearful that the signal here is that the rout in bonds isn't over.
For USD/JPY, that adds pressure to restrain the pair. After non-farm payroll,s the pair rose to 149.53 briefly but otherwise, the high since intervention last week was 149.32 and we're quickly approaching that.
