Bond Market Update

Auction Reaction

• U.S. Treasuries trade just above session lows that were reached in recent action with yields up about three basis points across the curve. Treasuries slowly backpedaled from their early highs through morning trade, returning yields to their closing levels from Monday, with the recent slip taking place after the U.S. Treasury completed this week's auction slate with a soft sale of $22 bln in 30-yr bonds. The auction drew a high yield of 4.015%, which tailed the when-issued yield by 1.4 basis points while the bid-to-cover ratio (2.38x vs 2.39x average) was just below average and indirect takedown (68.7% vs 65.4% average) was a bit above average.
• Yield Check:
  • 2-yr: +2 bps to 3.67%
  • 3-yr: +3 bps to 3.50%
  • 5-yr: +3 bps to 3.48%
  • 10-yr: +3 bps to 3.69%
  • 30-yr: +4 bps to 4.00%