Bond Market Update

Auction Reaction

• U.S. Treasuries continue trading in mixed fashion with the 2-yr note hanging onto a solid gain while longer tenors hover just below their flat lines. The market has faced some light pressure in recent action, as the U.S. Treasury completed today's $70 bln 5-yr note sale to decent demand. Granted, the high yield (3.645%) tailed the when-issued yield by 0.3 bps, but the bid-to-cover ratio (2.41x) was in line with the prior 12-auction average while indirect takedown (70.5% vs 66.5% average) was above average. This week's note auction slate will be completed with a $44 bln 7-yr note offering tomorrow.
• Yield Check:
  • 2-yr: -3 bps to 3.87%
  • 3-yr: +1 bp to 3.73%
  • 5-yr: +1 bp to 3.66%
  • 10-yr: +1 bp to 3.84%
  • 30-yr: UNCH at 4.13%