Bond Market Update

Auction Reaction

• U.S. Treasuries trade at their best levels after overcoming some early softness in shorter tenors. Longer tenors began adding to their gains shortly after the start while shorter tenors followed a bit later. The entire complex has reached a fresh high in reaction to the just completed $44 bln 7-yr note sale, which met better demand than note sales from the past two days. Today's offering drew a high yield of 3.930%, which stopped through the when-issued yield by 0.3 basis points while the bid-to-cover ratio (2.51x vs 2.58x average) and indirect takedown (59.0% vs 66.8%) were below average.
• Yield Check:
  • 2-yr: -1 bp to 3.52%
  • 3-yr: -1 bp to 3.57%
  • 5-yr: -1 bp to 3.73%
  • 10-yr: -3 bps to 4.14%
  • 30-yr: -3 bps to 4.80%