Bond Market Update

Auction Reaction

• U.S. Treasuries continue trading near their best levels of the session after a swift recovery off their opening lows. The market has spent the past three hours in a sideways range with some underperformance in the belly while recent trade has seen a push to fresh highs in the long bond after the U.S. Treasury completed this week's trifecta of solid note auctions with a $44 bln 7-yr note sale. The offering drew a high yield of 4.276%, which stopped through the when-issued yield by 0.3 bps while the bid-to-cover ratio (2.58x vs 2.55x average) and indirect takedown (69.7% vs 68.7%) were just above average.
• Yield Check:
  • 2-yr: -4 bps to 4.71%
  • 3-yr: -4 bps to 4.49%
  • 5-yr: -4 bps to 4.29%
  • 10-yr: -4 bps to 4.28%
  • 30-yr: -3 bps to 4.42%