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Illustration: Rebecca Zisser/Axios

The Treasury held an incredibly weak auction of 2-year government debt Tuesday that saw primary dealers, who are essentially on clean-up duty, take home their highest share of the auction since December 2018.

What it means: Even though yields on the 2-year note have fallen by nearly 40 basis points this year, traders are convinced that there is "certainly more room for yields to fall," Ben Jeffery, rates analyst at BMO Capital Markets, tells Axios.

Why it matters: It's the latest evidence that the market is growing more certain the Fed will cut U.S. interest rates this year.

One level deeper: "As for the auction, it suggests that given how far and how fast the move has run, some primary market participants seem to be of the mind more attractive entry points could present themselves over the near term," Jeffery adds.

Another level deeper: The coronavirus outbreak has hurt the buying power of investors in Japan and China, who are direct bidders in U.S. Treasury auctions, a category of buyer that typically takes a substantial percentage.

  • "Remember, one of the important reasons for foreign interest in U.S. Treasuries is that they invest the profits from the trade surplus they enjoy with the U.S.," DRW Trading rates strategist Lou Brien tells Axios.
  • "But the virus has curtailed a lot of trade, and therefore [there are] fewer profits to invest."

Go deeper:

Go deeper

UNC race conscious admissions process upheld by judge

Students walk through the campus of the University of North Carolina at Chapel Hill on Aug. 18, 2020 in Chapel Hill, North Carolina. Photo: Melissa Sue Gerrits/Getty Images

The University of North Carolina at Chapel Hill can continue its race conscious admissions process, a federal judge ruled on Monday.

Why it matters: The case could end up in the Supreme Court after the conservative nonprofit Students for Fair Admissions (SFFA) vowed to appeal the judge's ruling that UNC didn't discriminate against against white and Asian American applicants in its policy that it said was designed to increase diversity.

SEC debunks conspiracy theories about meme stock mania

Photo: Alessia Pierdomenico/Bloomberg via Getty Images

The SEC issued its long-awaited report on the meme stock mania, which downplayed the narrative that a "short squeeze" was the primary driver behind GameStop's historic stock moves — and shot down conspiracy theories about the event.

Why it matters: The postmortem was highly anticipated, largely because of what it could hint about what the regulator thinks should be done in wake of the saga. But the report stopped short of specific policy recommendations.

3 hours ago - Politics & Policy

Breaking Biden's diplomatic logjam

Expand chart
Data: Center for Presidential Transition via Congress.gov; Chart: Will Chase/Axios

The logjam for reviewing and confirming President Biden's ambassadorial picks is finally starting to break.

Why it matters: Biden is far behind his predecessors in the rate at which his ambassadorial picks have been confirmed. The Senate Foreign Relations Committee will hold a series of high-profile hearings and votes this week to finally begin chipping away at the backlog.