Kicking off this week's series of long-term securities auctions, the Treasury Department sold $28 billion worth of two-year notes on Monday, attracting strong demand.
The two-year note auction drew a high yield of 0.542 percent and a bid-to-cover ratio of 3.71.
Last month, the Treasury sold $29 billion worth of two-year notes, drawing a high yield of 0.425 percent and a bid-to-cover ratio of 3.11.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The ten previous two-year note auctions had an average bid-to-cover ratio of 3.36.
Peter Boockvar, managing director at the Lindsey Group, said, "As the two-year note is highly sensitive to what the Fed does with short rates, the market certainly doesn't think a hike is coming anytime soon."
"The focus of many has been the inflation side of the dual mandate in what will drive Fed policy rather than the labor side," he added. "We still think the Fed will look at the labor market first as if it continues to tighten, wage inflation will eventually follow, and thus inflation can be looked at as a lagging indicator."
Looking ahead, the Treasury is due to sell $35 billion worth of five-year notes on Tuesday and $29 billion worth of seven-year notes on Wednesday.
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Market Analysis
May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.