After the hike, $183 billion of Treasuries go to auction
The week of September 21-25 brings $183 billion of 2-, 5- and 7-year note auctions after the Fed’s first increase since 2023. A Trump-Xi summit is Thursday; Costco reports after the close.
The S&P 500 spent last week going almost nowhere. It closed Friday, September 18, at 7,650.50, down 0.08% on the week, after the Federal Reserve raised its funds-rate target a quarter point to 3.75%-4.00%. The Nasdaq-100 gained 0.94% on the week. Monday through Friday is not a payroll or CPI week. It is the first coupon supply after that hike: $183 billion of 2-, 5- and 7-year notes, into a curve whose front end has already moved. The VIX closed Friday at 14.81.
$183 billion of 2-, 5- and 7-year notes
Treasury’s September coupon schedule is the load-bearing event. The department is set to auction $69 billion of 2-year notes on Tuesday, $70 billion of 5-year notes on Wednesday, and $44 billion of 7-year notes on Thursday, all settling September 30. Bill supply runs alongside, starting with 13-week and 26-week sales on Monday.
The paper being sold is 2-, 5- and 7-year notes, not the 10-year. The 2-year yield finished Friday at 4.76%, up 13 basis points on the week; the 5-year was 4.86%. The 10-year, which is not on this week’s calendar, was 5.01%, up 5 basis points.
The 2-year sits at 4.76% after the hike
The 2-year yield rose 13 basis points after the Fed hike. Long Treasuries still gained. The iShares 7-10 Year Treasury Bond ETF IEF, which holds the sector that includes Thursday’s 7-year, closed at $90.80, 10 cents from its 52-week low. The iShares 20+ Year Treasury Bond ETF TLT gained on the week and finished at $81.25, 12% below its 52-week high.
TLT gained last week as IEF slipped
- IEF · 90.8
- TLT · 81.25
Last month’s sales of the same sizes are the bar. The 2-year on August 25 cleared at 4.204% with a 2.60 bid-to-cover and indirect bidders taking 66% of competitive awards. The 5-year on August 26 stopped at 4.393% with a 2.37 cover and a 62% indirect share. The 7-year on August 27 stopped at 4.512% with a 2.50 cover and a 61% indirect share. Bid-to-cover ratios and indirect demand at this week’s three coupon sales will tell you more about the new funds-rate range than any speech.
The one speech on the same channel is Tuesday: Vice Chair Philip Jefferson on discount-window modernization and Treasury market functioning, at the New York Fed’s Treasury Market Conference. The blackout that covered last week’s meeting ended Thursday, September 17. The next FOMC decision is October 27-28.
Trump and Xi, then China markets shut
The White House has Xi in Washington on Thursday, September 24, with arrival events Wednesday and a visit that runs into Friday. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng began talks Sunday, September 20, in New York to set the table. The published agenda is the familiar one: tariffs, rare-earth export controls, and technology. The date that gives the meeting a deadline is November 10, when the current trade pause is set to expire.
What matters for portfolios is whether any language on tariffs or export controls is specific enough to reprice the names that have already been living with both. The KraneShares CSI China Internet ETF KWEB closed Friday at $24.83, 43% below its 52-week high. The VanEck Semiconductor ETF SMH closed at $573, 15% below its own 52-week high.
Friday adds a mechanical wrinkle. Mainland China and Taiwan markets are shut for the Mid-Autumn Festival, the session immediately after the summit. Price discovery in U.S.-listed China funds will sit on offshore listings and ADRs. China also sets its 1-year and 5-year loan-prime rates on Monday.
Claims, then durable goods
Thursday’s jobless claims are the print that can still move the October meeting. They cover the week ended September 19, after a 196,000 reading for the week ended September 12. Friday’s Census advance durable-goods report for August is the week’s look at whether companies are still ordering equipment after the hike.
S&P Global’s flash U.S. PMIs on Wednesday are the first broad read on September activity. New residential sales for August are due Thursday; July sales ran at a 607,000 seasonally adjusted annual rate. The Bureau of Economic Analysis’s quarterly international transactions report prints the same morning as claims. KB Home, 3.5% of the S&P homebuilders sector fund XHB, reports after the close Tuesday as an orders read on last week’s move in the 2-year.
Costco is the earnings week
It is a thin earnings docket: no mega-cap technology name, no large bank, no semiconductor equipment print. Costco Wholesale is the exception by size. The company, valued at $397 billion at Friday’s close, reports after the close Thursday. It is 8.6% of the S&P 500 staples sector fund XLP, behind only Walmart. Membership renewals, traffic, and ticket growth are the operating questions.
AutoZone reports before the open Tuesday (aftermarket demand). Cintas, Paychex, and General Mills report before the open Wednesday (business services, small-business payrolls, food volumes). Darden Restaurants, which confirmed a Thursday morning release for fiscal 2027’s first quarter, is the restaurant traffic print.
By Friday you will know whether $183 billion of 2-, 5- and 7-year notes cleared at these yields. That is the first read on whether the new funds-rate range has a bid.
Frequently asked
Why do these auctions matter more than usual?
They are the first coupon supply after the Fed's hike, so bid-to-cover ratios and indirect demand will show whether the new funds-rate range has a bid.
Which maturities are being sold?
Two-, five- and seven-year notes: not the 10-year, which is not on this week's calendar.
What is the benchmark for judging the results?
Last month's sales of the same sizes, which cleared at 4.204%, 4.393% and 4.512% with covers of 2.60, 2.37 and 2.50.
What could come out of the Trump-Xi meeting?
The agenda is tariffs, rare-earth export controls and technology, and what matters is whether any language is specific enough to reprice names already living with both.
Who reports earnings?
Costco is the week's only large name, reporting after the close Thursday, with membership renewals, traffic and ticket growth the operating questions.