Bond Market Update

Auction Reaction

• U.S. Treasuries have dipped from their highs in response to a soft $22 bln 30-yr bond reopening. The reopening drew a high yield of 4.405%, which tailed the when-issued yield by 2.2 basis points while the bid-to-cover ratio (2.30x vs 2.41x average) and indirect takedown (60.8% vs 66.3% average) were below average. The poorly received auction makes for a bit of a blemish on this week's otherwise strong slate of note and bond sales. Despite the post-auction selling, yields remain at levels that were seen in immediate reaction to the June CPI report.
• Yield Check:
  • 2-yr: -11 bps to 4.50%
  • 3-yr: -11 bps to 4.26%
  • 5-yr: -12 bps to 4.12%
  • 10-yr: -9 bps to 4.19%
  • 30-yr: -6 bps to 4.41%