Bond Market Update

Auction Reaction

• U.S. Treasuries have rallied off their lows thanks to an excellent $39 bln 10-yr note reopening, which assuaged some fears about growing structural cracks in the Treasury market. Treasuries hovered just above their opening lows ahead of the auction but they are now back near their rebound highs from mid-morning trade. The 10-yr note reopening drew a high yield of 4.435%, which stopped through the when-issued yield by three basis points. The bid-to-cover ratio (2.67x) was well above average (2.54x) while indirect takedown (87.9% vs 67.3% average) hit a record, reflecting huge foreign interest.
• Yield Check:
  • 2-yr: +3 bps to 3.77%
  • 3-yr: +7 bps to 3.83%
  • 5-yr: +10 bps to 4.01%
  • 10-yr: +14 bps to 4.40%
  • 30-yr: +14 bps to 4.86%