As we noted here, the Treasury announced it would raise the amount of long-term debt it sells to $78 billion this quarter, up from $73 billion last quarter, while launching a new two-month bill. 

The surprise is that whereas consensus had expected 5-year auctions to increase by $1 billion in the quarter, the Treasury will now increase the auction amount by $1bn every month in the quarter, for a total of $3 billion, which in turn will put extra pressure on the belly of the curve.   

And that extra supply has prompted weakness across the Treasury curve, pushing 10Y Yields back above 3.00% for the first time since The Fed hiked rates in June...

And the yield curve is steepening...

All of this ahead of The Fed this afternoon.

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