Demand for Treasury notes is high despite record issuance and lower yields
Bond investors have been snapping up U.S. government debt in recent weeks, pushing yields back toward record lows.
Driving the news: Tuesday's auction of 7-year Treasury notes continued a trend of increased bids and lower yields.
- It followed an auction of $48 billion of 2-year notes at a high yield of 0.155%, and $49 billion of 5-year notes at a high yield of 0.288%.
- These auctions represent both the lowest yields ever for each maturity and the largest amounts ever, according to data from BMO Capital Markets rates strategist Ben Jeffery.
Why it matters: Despite the increasing size of the Treasury issuance to deal with the growing U.S. budget deficit, investor appetite has increased, suggesting strong investors demand for safe-haven assets.
Yes, but: Declining yields may also be helping drive down the value of the dollar, which is on pace for its worst monthly performance in a decade.