Bond Market Update

Auction Reaction

• U.S. Treasuries continue hovering near their opening levels after a quiet sideways drift through the morning. The market did not move much in reaction to Fed Chairman Powell telling the Senate Banking Committee that there is no rush to adjust policy, and it has shown a somewhat muted reaction to the just-completed $58 bln 3-yr note sale, which met strong demand. The auction drew a high yield of 4.300%, which stopped through the when-issued yield by 1.3 basis points while the bid-to-cover ratio (2.79x vs 2.57x average) and indirect takedown (74.0% vs 65.4% average) were comfortably above average.
• Yield Check:
  • 2-yr: +2 bps to 4.29%
  • 3-yr: +3 bps to 4.32%
  • 5-yr: +4 bps to 4.37%
  • 10-yr: +4 bps to 4.54%
  • 30-yr: +4 bps to 4.75%