Bond Market Update

Auction Reaction

• U.S. Treasuries have continued rising off their early lows with the long bond turning positive in recent trade while the 10-yr note is back at its flat line after overcoming its opening loss. The 5-yr note and longer tenors received a recent push to fresh highs after the U.S. Treasury's second note auction of the day—a $70 bln 5-yr note sale—met better demand than the 2-yr note offering. The 5-yr sale drew a high yield of 3.625%, which stopped through the when-issued yield by a tenth of a basis point while the bid-to-cover ratio (2.38x) was in line with the prior 12-auction average.
• Yield Check:
  • 2-yr: +2 bps to 3.50%
  • 3-yr: +2 bps to 3.51%
  • 5-yr: +2 bps to 3.62%
  • 10-yr: UNCH at 4.00%
  • 30-yr: -2 bps to 4.57%