Bond Market Update

Auction Reaction

• U.S. Treasuries are back near their opening levels after inching down from their highs. The market spent the morning in a slow rise off lows, finding some recent resistance just as the U.S. Treasury sold $58 bln in 3-yr notes to soft demand. The sale drew a high yield of 3.784%, which tailed the when-issued yield by 2.4 basis points. The bid-to-cover ratio (2.47x) was below average (2.60x) while indirect takedown (73.0%) was well above average (65.5%), indicating strong foreign demand. This left direct bidders with the lowest share of the issue (6.2%) since March 2020.
• Yield Check:
  • 2-yr: +3 bps to 3.76%
  • 3-yr: +3 bps to 3.77%
  • 5-yr: +3 bps to 3.87%
  • 10-yr: +4 bps to 4.20%
  • 30-yr: +5 bps to 4.65%