Bond Market Update

Auction Reaction

• U.S. Treasuries have risen off lows that were reached in the wake of the strong ISM Services report for October (56.0%; Briefing.com consensus 53.5%). The market began inching up off those levels around 11:30 ET with a recent boost from today's $42 bln 10-yr note sale, which met solid demand. The auction drew a high yield of 4.347%, which stopped through the when-issued yield by 0.3 bps while the bid-to-cover ratio (2.59x) was above the average seen at the previous twelve auctions (2.51x). Indirect takedown (61.7%) made for the only blemish, since it was a bit below average (67.2%). The U.S. Treasury will cap this week's auction slate with a $25 bln 30-yr bond sale tomorrow.
• Yield Check:
  • 2-yr: +4 bps to 4.22%
  • 3-yr: +3 bps to 4.18%
  • 5-yr: +4 bps to 4.20%
  • 10-yr: +3 bps to 4.34%
  • 30-yr: UNCH at 4.50%