Bond Market Update

5-yr Note Auction Reaction

• U.S. Treasuries have remained pressured, with 10s and shorter tenors sliding to fresh lows after today's second auction—a $70 bln 5-yr note sale—also met soft reception. The 5-yr note auction drew a high yield of 4.138%, which tailed the when-issued yield by 1.6 basis points, though the internals of the auction were not bad, as the bid-to-cover ratio (2.39x) matched the prior 12-auction average while indirect takedown (76.4% vs 66.7% average) was a bit better than average. The U.S. Treasury will cap this week's note auction slate with a $44 bln 7-yr note offering tomorrow.
• Yield Check:
  • 2-yr: +5 bps to 4.15%
  • 3-yr: +5 bps to 4.09%
  • 5-yr: +7 bps to 4.12%
  • 10-yr: +6 bps to 4.29%
  • 30-yr: +4 bps to 4.54%