After the Fed ruffled markets in the past week, the Treasury's 5-year note auction Wednesday should get more attention than usual as traders watch to see whether the prospect for higher rates has been fully priced in.
There is a key 1 p.m. ET auction of $35 billion in 5-year notes, a part of the curve where yields moved dramatically higher after last week's Fed meeting. That narrowed the gap with 30-year bond yields to the tightest spread since 2009 on expectations by some traders that higher rates at the short-end will now come sooner than expected.
Traders also said that many bond funds were long the 5-year note, and were forced to quickly reposition.