Bond Market Update

Auction Reaction

• U.S. Treasuries hover just above their lows after pulling back from their starting highs. The market is holding near lows in the wake of today's $58 bln 3-yr note sale, which met soft demand. The sale drew a high yield of 3.972%, which tailed the when-issued yield by 0.4 basis points while the bid-to-cover ratio (2.52x) was a bit below average (2.59x). Indirect takedown (66.8%), however, was above average (66.3%), reflecting solid foreign demand. Today's sale will be followed by a $39 bln 10-yr note reopening tomorrow.
• Yield Check:
  • 2-yr: +1 bp to 4.01%
  • 3-yr: UNCH at 3.98%
  • 5-yr: -1 bp to 4.08%
  • 10-yr: -1 bp to 4.48%
  • 30-yr: -1 bp to 4.95%