Bond Market Update

Sitting on Highs

• U.S. Treasuries are holding at their best levels of the day with issues in the belly showing relative strength. The 3-yr note and longer tenors reached session highs after the U.S. Treasury completed this week's solid note auction slate with a strong $44 bln 7-yr note offering at 11:30 ET. The sale drew a high yield of 4.183%, which stopped through the when-issued yield by 1.4 basis points while the bid-to-cover ratio (2.71x vs 2.53x average) was comfortably above average, though indirect takedown (64.1% vs 69.1% average) was a bit shy of the prior 12-auction average. Thanks to the solid auction, yields on most tenors are now back at their November lows while the 30-yr yield has slipped to a level not seen since mid-October.
• Yield Check:
  • 2-yr: -5 bps to 4.20%
  • 3-yr: -7 bps to 4.15%
  • 5-yr: -9 bps to 4.10%
  • 10-yr: -7 bps to 4.23%
  • 30-yr: -6 bps to 4.42%