US set to sell seven-year notes

Look out for the results just after the top of the hour.

Here are some pros and cons from BMO:

Pros

• We
  haven’t seen a coupon auction tail since the 3-year offering on June 10th.
  Since then, 2s, 5s, 10s, 20s, 30s, and 5-year TIPS all stopped-through
  with above-average non-dealer allocations driven by elevated indirect
  bidding.
• Over
  the last decade, we’ve only seen three 7-year auctions tail during June,
  and seven stop-through. Framed another way, only one of the last six
  7-year auctions during June tailed (2022), with the other five auctions
  stopping through and by an average of 0.4 bp.
• 7-year
  supply has been generally well-received in 2024 with three auctions
  stopping through (Feb/Mar/Apr) and two tailing (Jan/May) – but even
  January’s tailed auction (0.3 bp) saw above-average non-dealer
  participation.
• Overseas
  buyers have taken a growing allocation over the last 3 months and May’s
  19.0% award represented the highest since January 2023.

Cons

• The
  macro narrative is unlikely to be materially shifted or confirmed until
  the July 11th release of June CPI which may serve as an offset to
  aggressive bidding this afternoon.
• The
  bearish impulses of Aussie and Canadian CPI combined with Japanese
  intervention fears may leave a subset of buyers hesitant to buy 7s at the
  moment.

Fed-speak has been very consistent in the
message that more convincing is needed to be confident inflation is on a
sustainable path to 2%, and there remains an elevated degree of uncertainty
whether the FOMC will cut in September or delay further

This article was written by Adam Button at www.forexlive.com.