Bond Market Update

Auction Reaction

• U.S. Treasuries have risen off their lows, thanks to the just-completed $44 bln 7-yr note sale, which met strong demand, giving the market some relief after it faced prolonged pressure. The auction drew a high yield of 4.215%, which stopped through the when-issued yield by two basis points while the bid-to-cover ratio (2.74x vs 2.53x average) and indirect takedown (72.0% vs 69.1% average) were comfortably above average. The post-auction rally has lifted the 2-yr note into positive territory while longer tenors are rising above today's opening levels.
• Yield Check:
  • 2-yr: -1 bp to 4.13%
  • 3-yr: UNCH at 4.09%
  • 5-yr: +2 bps to 4.13%
  • 10-yr: +2 bps to 4.30%
  • 30-yr: +2 bps to 4.55%