Bond Market Update

Auction Reaction

• U.S. Treasuries remain in negative territory, holding above their lows in the wake of the just-completed $70 bln 5-yr note sale, which met solid demand. The auction drew a high yield of 4.197%, which stopped through the when-issued yield by 0.2 basis points. The bid-to-cover ratio (2.43x vs 2.39x average) was just above average while indirect takedown (64.1% vs 67.9% average) was a bit light relative to the prior 12-auction average. The 10-yr note and shorter tenors hover below their opening levels, but above their morning lows, while the long bond sits just above its starting mark.
• Yield Check:
  • 2-yr: +1 bp to 4.28%
  • 3-yr: +3 bps to 4.24%
  • 5-yr: +4 bps to 4.21%
  • 10-yr: +4 bps to 4.31%
  • 30-yr: +3 bps to 4.48%