Bond Market Update

Auction Reaction

• U.S. Treasuries continue hovering near their starting levels, having spent today's session in a sideways range. The market established fresh intraday highs and lows during the past two hours, but it is now back at levels seen at the open. There has been no meaningful reaction to the just-completed $70 bln 5-yr note offering, which met somewhat soft demand. The sale drew a high yield of 4.100%, which tailed the when-issued yield by 0.5 basis points, while the bid-to-cover ratio (2.33x) was a bit below average (2.39x). Indirect takedown (75.8%), however, was above the average (68.6%), seen at the last 12 auctions.
• Yield Check:
  • 2-yr: +1 bp to 4.01%
  • 3-yr: +3 bps to 4.01%
  • 5-yr: +4 bps to 4.10%
  • 10-yr: +4 bps to 4.35%
  • 30-yr: +4 bps to 4.70%