$58B Treasury Note Sale Eyes Boost from Economic Trends

The $58 billion 3-year Treasury note sale today is expected to benefit from a more favorable supply outlook and macroeconomic conditions. The US Treasury plans to maintain steady coupon auction sizes for the next few quarters and will start buying back its debt, while the Fed's Treasury runoff cap has been reduced to $25 billion/month.
Economic data slowdown, including the April jobs report and consumer confidence, supports bond bulls and increases demand for today's auction. May historically shows positive results for 3-year auctions, with a majority stopping through or on the screws in recent years.
Despite the positive outlook, concerns about upcoming CPI data and potential overbought conditions after a recent bond rally may deter some buyers. Last month's 3-year auction tailed by 2.0 bps, indicating caution among potential buyers.