Notes for Mon, May 11, 2026

No new inputs since the open; the bid for paper shows up in seclend, not in flow we can see.

The read

Status quo holds. No Tier 1 prints, no fresh commentary, no observation deltas since this morning, into a seven-auction week, the absence of news is itself the signal. If real-money were defending against supply we'd expect it to leak through commentary by the European afternoon. It hasn't.

We carry priors: front-end well-behaved, term premium quiet, dealers willing to warehouse. The alternate read, that today's silence masks a stealth concession being built ahead of the belly stops, would want corroboration from a cheapening on-the-run or a back-up in repo specialness on the issues being auctioned. We see the opposite in the seclend tape (below). View breaks if tomorrow's 3y stops tail more than 0.5 bp through the screen, which would say the bid we're inferring isn't there at size.

Specials tape — where the demand actually is

The 08-May SOMA seclend file is the most useful thing on the desk today. Top of the specials list is a tight cluster of bills: <cite index="INVENTORY-1">912797UN5 (B 07/07/26) at 7.0 bp^[1]</cite>, with <cite index="INVENTORY-2">912797TX5 (B 08/20/26) at 6.1 bp^[2]</cite> and <cite index="INVENTORY-3">912797TW7 (B 08/13/26) at 5.9 bp^[3]</cite> right behind. Summer maturities catching a bid is consistent with money funds and the usual bill-cash sponsorship, not a stress signal, a demand signal.

The one to flag is <cite index="INVENTORY-4">91282CQB0 (T 03.375 02/29/28) at 5.3 bp^[4]</cite>, a current 2y trading meaningfully through floor into an auction week. That's the bid showing up where it counts. A bear-flattener tape later this week would also fit a hawkish-repricing read; weighting against it, a 2y trading this special doesn't square with PMs lightening duration. Assumes the issue isn't being squeezed by a single levered short.

Plumbing and gaps

<cite index="INVENTORY-5">IORB is filed through 2026-05-08^[5]</cite>; SOFR/EFFR/OBFR through 2026-05-07. No SOFR-IORB inversion to flag from what's in the system. The DGS strip is still stamped at 2026-05-06 in inventory, Thursday and Friday closes haven't ingested yet, so we're not putting bp moves on the page we can't anchor. Treasury TGA through 05-06 likewise; the Daily Statement that would refresh balance and bill paydown trajectory drops at 4 PM ET and isn't in the file as we write.

Admin note for ourselves, not for the tape: if the DGS gap persists into tomorrow's open brief we need to flag it upstream.

Into tomorrow

Carry the long-belly bias. The seclend signal is the cleanest thing we have and it leans toward auctions being well-bid. We'd fade a 1 - 2 bp cheapening into the 3y as setup, not as a signal. The thing that changes the call is a repo print Tuesday morning showing the on-the-run 2y losing its specialness, that would say the bid we're reading off the SL file was technical, not real.

Citations

1. [1]912797UN5 (B 07/07/26) at 7.0 bp (912797UN5 (B 07/07/26) at 7.0 bp) — Observation · observation:seclend_observations:912797UN5:2026-05-08
2. [2]912797TX5 (B 08/20/26) at 6.1 bp (912797TX5 (B 08/20/26) at 6.1 bp) — Observation · observation:seclend_observations:912797TX5:2026-05-08
3. [3]912797TW7 (B 08/13/26) at 5.9 bp (912797TW7 (B 08/13/26) at 5.9 bp) — Observation · observation:seclend_observations:912797TW7:2026-05-08
4. [4]91282CQB0 (T 03.375 02/29/28) at 5.3 bp (91282CQB0 (T 03.375 02/29/28) at 5.3 bp) — Observation · observation:seclend_observations:91282CQB0:2026-05-08
5. [5]IORB is filed through 2026-05-08 (IORB obs_date 2026-05-08 per inventory) — FRED IORB · May 8, 2026

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