Bond Market Update

Auction Reaction

• U.S. Treasuries hover near levels seen in immediate reaction to the hot January CPI report. The past couple hours have seen a slow rise off lows, but the bounce just found a small speed bump in the form the $42 bln 10-yr note auction, which met soft demand. The auction drew a high yield of 4.632%, which tailed the when-issued yield by nearly a basis point. The bid-to-cover ratio (2.48x) was a bit below average (2.54x) while indirect takedown (71.5%) was above the prior 12-auction average (67.2%).
• Yield Check:
  • 2-yr: +8 bps to 4.37%
  • 3-yr: +9 bps to 4.40%
  • 5-yr: +12 bps to 4.49%
  • 10-yr: +10 bps to 4.64%
  • 30-yr: +8 bps to 4.83%