Bond Market Update

Auction Reaction

• Recent action saw the 10-yr note inch above its post-CPI high while other tenors are on the verge of doing the same. The thrust that lifted the 10-yr note to a fresh high for the day followed the completion of today's $39 bln 10-yr note reopening, which met solid demand, making for an improvement from yesterday's 3-yr note sale. Today's auction drew a high yield of 4.421%, which stopped through the when-issued yield by 0.7 basis points. The bid-to-cover ratio (2.52x) was a bit shy of the prior 12-auction average (2.57x) but indirect takedown (70.6%) was above average (70.1%). The U.S. Treasury will complete this week's note and bond auction slate with a $22 bln 30-yr bond reopening tomorrow.
• Yield Check:
  • 2-yr: -5 bps to 3.96%
  • 3-yr: -7 bps to 3.92%
  • 5-yr: -7 bps to 4.02%
  • 10-yr: -6 bps to 4.42%
  • 30-yr: -4 bps to 4.90%