Bond Market Update

Auction Reaction

• U.S. Treasuries are making a renewed push toward their session highs from morning trade. The market spent the past couple hours in a sideways range just below highs, followed by a wave of buying in the wake of today's $69 bln 2-yr note auction, which met excellent demand. The sale drew a high yield of 4.274%, which stopped through the when-issued yield by nearly two basis points, while the bid-to-cover ratio (2.77x vs 2.61x average) and indirect takedown (71.6% vs 64.7% average) were well above average. Today's auction will be followed by a $70 bln 5-yr note offering tomorrow and a $44 bln 7-yr note sale on Wednesday.
• Yield Check:
  • 2-yr: -8 bps to 4.29%
  • 3-yr: -8 bps to 4.23%
  • 5-yr: -10 bps to 4.20%
  • 10-yr: -12 bps to 4.29%
  • 30-yr: -13 bps to 4.47%