Bond Market Update

Auction Reaction

• Longer-dated U.S. Treasuries continue hovering just above lows that were set in the wake of the strong ISM Services report for December (54.1%; Briefing.com consensus 53.0%) while shorter tenors have shown a bit more resilience. The market has not shown much of an immediate reaction to the just-completed $39 bln 10-yr note reopening, which met demand that was on the softer side. The sale drew a high yield of 4.680%, which tailed the when-issued yield by 0.2 basis points while the bid-to-cover ratio (2.53x vs 2.54x average) and indirect takedown (61.4% vs 67.4%) were a bit below the prior 12-auction average. The U.S. Treasury will cap this week's note and bond auction slate with a $22 bln 30-yr bond reopening tomorrow.
• Yield Check:
  • 2-yr: +2 bps to 4.29%
  • 3-yr: +5 bps to 4.36%
  • 5-yr: +4 bps to 4.46%
  • 10-yr: +6 bps to 4.68%
  • 30-yr: +7 bps to 4.90%