Bond Market Update

Auction Reaction

• U.S. Treasuries continue drifting near their opening levels with shorter tenors continuing their slight underperformance. The market, which was briefly rattled by the release of the cooler-than-expected CPI report for February (0.2%; Briefing.com consensus 0.3%), has held its ground in reaction to the just-completed $39 bln 10-yr note reopening, which met strong demand. The sale drew a high yield of 4.310%, which stopped through the when-issued yield by 0.5 basis points while the bid-to-cover ratio (2.59x vs 2.53x average) was just above average and indirect takedown (67.4% vs 67.6% average) was a touch below average.
• Yield Check:
  • 2-yr: +4 bps to 3.98%
  • 3-yr: +4 bps to 3.98%
  • 5-yr: +2 bps to 4.06%
  • 10-yr: +2 bps to 4.30%
  • 30-yr: +2 bps to 4.62%