Bond Market Update

Auction Reaction

• U.S. Treasuries trade a bit above their lowest levels of the day with the long bond showing some strength at it rises to a fresh high for the day. The market has seen some light buying in recent trade even though today's first auction was pretty weak. The U.S. Treasury sold $69 bln in 2-yr notes at a high yield of 3.504%, which tailed the when-issued yield by a tenth of a basis point while the bid-to-cover ratio (2.59x vs 2.61x average) and indirect takedown (53.7% vs 65.7% average) were below average. Later today, the Treasury will sell $70 bln in 5-yr notes.
• Yield Check:
  • 2-yr: +3 bps to 3.51%
  • 3-yr: +3 bps to 3.52%
  • 5-yr: +3 bps to 3.63%
  • 10-yr: +2 bps to 4.02%
  • 30-yr: UNCH at 4.59%