Bond Market Update

Auction Reaction

• U.S. Treasuries hover within a striking distance of their opening levels after a slow dip from session highs that were reached around 10:30 ET. Treasuries slowly climbed off their lows in morning trade with 10s and 30s making a brief appearance in the green before the entire complex found resistance that that reversed the entire bounce. That said, the action has remained confined to a narrow range with the 10-yr yield bouncing between 4.14% and 4.17%. Treasuries are holding their ground in reaction to the just completed $13 bln 20-yr bond reopening, which met good demand. The sale drew a high yield of 4.798%, stopping through the when-issued yield by a tenth of a basis point while the bid-to-cover ratio (2.67x) was above average (2.62x). Indirect takedown (65.2%) was just below average (65.5%) making for a small blemish.
• Yield Check:
  • 2-yr: +2 bps to 3.50%
  • 3-yr: +2 bps to 3.54%
  • 5-yr: +1 bp to 3.71%
  • 10-yr: +1 bp to 4.16%
  • 30-yr: +1 bp to 4.83%