Bond Market Update

Auction Reaction

• U.S. Treasuries trade in mixed fashion with the front end hanging onto a small portion of today's gains while longer tenors remain in the red, but the entire complex saw some recent buying in response to a strong $39 bln 10-yr note reopening. The reopening drew a high yield of 4.235%, which stopped through the when-issued yield by nearly two basis points while the bid-to-cover ratio (2.70x vs 2.52x average) and indirect takedown (70.0% vs 67.4%) were comfortably above average. Today's impressive auction follows yesterday's decent 3-yr note sale ahead of tomorrow's $22 bln 30-yr bond reopening.
• Yield Check:
  • 2-yr: -1 bp to 4.14%
  • 3-yr: -1 bp to 4.10%
  • 5-yr: +1 bp to 4.10%
  • 10-yr: +2 bps to 4.24%
  • 30-yr: +5 bps to 4.45%