Bond Market Update

Auction Reaction

• Recent action saw the 2-yr note rally to a fresh high while longer tenors are back near their best levels of the session as the market responds to a strong $69 bln 2-yr note sale. The just completed offering drew a high yield of 4.434%, which stopped through the when-issued yield by 2.3 basis points while the bid-to-cover ratio (2.81x vs 2.65x average) and indirect takedown (76.6% vs 63.6% average) were solidly above average. Today's 2-yr note sale will be followed by a $70 bln 5-yr note offering tomorrow and a $44 bln 7-yr note offering on Thursday.
• Yield Check:
  • 2-yr: -4 bps to 4.48%
  • 3-yr: -4 bps to 4.26%
  • 5-yr: -3 bps to 4.15%
  • 10-yr: -3 bps to 4.23%
  • 30-yr: -2 bps to 4.46%