Bond Market Update

Auction Reaction

• Recent action saw a push to fresh highs as the market responded to the just-completed $13 bln 20-yr bond reopening, which met excellent demand. The sale drew a high yield of 4.452%, which stopped through the when-issued yield by 2.8 basis points while the bid-to-cover ratio (2.74x vs 2.63x average) and indirect takedown (77.9% vs 69.2% average) were comfortably above average. The recent uptick to highs makes for a continuation of today's bounce that was sparked by a below-consensus Retail Sales report for May (actual 0.1%; Briefing.com consensus 0.3%), returning yields to their closing levels from last week.
• Yield Check:
  • 2-yr: -6 bps to 4.70%
  • 3-yr: -7 bps to 4.43%
  • 5-yr: -6 bps to 4.24%
  • 10-yr: -6 bps to 4.22%
  • 30-yr: -5 bps to 4.36%