Bond Market Update

Auction Reaction

• Recent action saw 10s and 30s slip to fresh lows after the U.S. Treasury sold $13 bln in 20-yr bonds to weak demand. The sale drew a high yield of 4.039%, which tailed the when-issued yield by two basis points while the bid-to-cover ratio (2.51x vs 2.62x average) and indirect takedown (65.1% vs 70.4% average) were below their respective prior 12-auction averages. The 5-yr note and shorter tenors have not seen much movement following the auction, which leaves them just above lows from late morning trade.
• Yield Check:
  • 2-yr: +4 bps to 3.60%
  • 3-yr: +4 bps to 3.46%
  • 5-yr: +4 bps to 3.45%
  • 10-yr: +3 bps to 3.65%
  • 30-yr: +2 bps to 3.96%