Bond Market Update

Auction Reaction

• U.S. Treasuries of most tenors trade a bit below their morning highs while the 2-yr note has edged to a fresh high after a well-received $69 bln 2-yr note auction. The sale drew a high yield of 4.169%, which stopped through the when-issued yield by 1.1 basis points. The bid-to-cover ratio (2.56x) was a bit below average (67.6%), but indirect takedown (85.5% vs 67.6% average) was well above average, reflecting strong international interest. The U.S. Treasury will follow this sale with a $70 bln 5-yr note offering tomorrow.
• Yield Check:
  • 2-yr: -2 bps to 4.17%
  • 3-yr: -3 bps to 4.17%
  • 5-yr: -2 bps to 4.23%
  • 10-yr: -2 bps to 4.40%
  • 30-yr: -1 bp to 4.66%