Bond Market Update

Auction Reaction

• U.S. Treasuries have slipped past their morning lows in reaction to today's $42 bln 10-yr note sale, which met weak demand. The auction drew a high yield of 3.960%, which tailed the when-issued yield by 3.1 bps while the bid-to-cover ratio (2.32x vs 2.52x average) and indirect takedown (66.2% vs 66.9%) were below average. With the post-auction selling, the 10-yr yield is now back at its closing level from Thursday and up 17 basis points for the week.
• Yield Check:
  • 2-yr: +4 bps to 4.02%
  • 3-yr: +4 bps to 3.85%
  • 5-yr: +7 bps to 3.80%
  • 10-yr: +7 bps to 3.96%
  • 30-yr: +8 bps to 4.25%