Bond Market Update

Auction Reaction

• U.S. Treasuries trade on their lows after slipping out of the early sideways range alongside an advance in equities. The belly has been at the forefront of the selling, while the long end could see some late support stemming from the just-completed $13 bln 20-yr bond reopening, which met stellar demand. The sale drew a high yield of 4.900%, which stopped through the when-issued yield by 1.1 basis points, while the bid-to-cover ratio (2.75x vs 2.58x average) and indirect takedown (69.5% vs 69.2% average) were above the average seen at the prior 12-auctions.
• Yield Check:
  • 2-yr: +2 bps to 4.30%
  • 3-yr: +2 bps to 4.35%
  • 5-yr: +4 bps to 4.43%
  • 10-yr: +3 bps to 4.61%
  • 30-yr: +2 bps to 4.82%