Bond Market Update

Auction Reaction

• U.S. Treasuries trade at their best levels of the session with longer tenors maintaining their outperformance. The 2-yr note is little changed after recovering its modest early loss, holding at its best level after the U.S. Treasury sold $69 bln in 2-yr notes to good demand. The sale drew a high yield of 3.489%, which was right on the screws. The bid-to-cover ratio (2.68x) was a touch above average (2.62x) while indirect takedown (58.1%) was a bit light relative to the prior 12-auction average (65.3%). The U.S. Treasury will sell $70 bln in 5-yr notes tomorrow.
• Yield Check:
  • 2-yr: UNCH at 3.51%
  • 3-yr: UNCH at 3.50%
  • 5-yr: -1 bp to 3.61%
  • 10-yr: -2 bps to 4.04%
  • 30-yr: -3 bps to 4.68%