Bond Market Update

Auction Reaction

• Recent action saw the 3-yr note and longer tenors rise to fresh session highs while the 2-yr note is on the verge of doing the same. The uptick to highs took place after the U.S. Treasury conducted this week's sole note and bond offering, reopening $13 bln in 20-yr bonds. The sale met strong demand, as the high yield (4.632%) stopped through the when-issued yield by 1.4 basis points while the bid-to-cover ratio (2.78x vs 2.60x average) was comfortably above average. Indirect takedown (68.8%), however, a bit below the average seen at the previous 12 auctions (70.2%).
• Yield Check:
  • 2-yr: -2 bps to 4.03%
  • 3-yr: -3 bps to 4.00%
  • 5-yr: -4 bps to 4.06%
  • 10-yr: -3 bps to 4.28%
  • 30-yr: -2 bps to 4.58%