Bond Market Update

Auction Reaction

• U.S. Treasuries remain in the red with shorter tenors hovering just above their lows while the long bond is back near its opening level after backpedaling from its intraday high. Intraday action has unfolded inside a mostly sideways range with the complex staying near recent levels after the U.S. Treasury kicked off this week's note and bond auction slate with a $58 bln 3-yr note sale, which met ok demand. The auction drew a high yield of 4.117%, making for a slight tail relative to the when-issued market (4.116%). Meanwhile, the bid-to-cover ratio (2.58x) was a touch above average (2.56x) and indirect takedown (64.2%) was a bit below the prior 12-auction average (64.8%).
• Yield Check:
  • 2-yr: +3 bps to 4.16%
  • 3-yr: +4 bps to 4.13%
  • 5-yr: +4 bps to 4.11%
  • 10-yr: +4 bps to 4.24%
  • 30-yr: +3 bps to 4.42%