Bond Market Update

Auction Reaction

• U.S. Treasuries have spent the better part of the past three hours in a sideways range just above lows, but recent trade has seen some impulse buying in reaction to the just-completed $70 bln 5-yr note offering, which met solid demand after yesterday's strong 2-yr note sale. Today's auction drew a high yield of 4.331%, which stopped through the when-issued yield by 0.4 bps, while the bid-to-cover ratio (2.35x vs 2.44x average) was a touch below average and indirect takedown (68.9% vs 66.2% average) exceeded the prior 12-auction average. Even with the post-auction buying the 10-yr yield remains about a basis point above its opening mark.
• Yield Check:
  • 2-yr: +1 bp to 4.74%
  • 3-yr: +6 bps to 4.52%
  • 5-yr: +7 bps to 4.33%
  • 10-yr: +7 bps to 4.31%
  • 30-yr: +6 bps to 4.44%