Bond Market Update

5-yr Note Auction Reaction

• U.S. Treasuries continue hovering a bit above their morning lows, staying at levels that were seen before today's pair of auctions. The just completed $70 bln 5-yr note sale looked worse than the earlier 2-yr note offering with the high yield tailing the when-issued yield by 0.8 basis points. The bid-to-cover ratio (2.31x) was below average (2.39x) while indirect takedown (58.3%) was well shy of average (69.7%). Overall, this made for a step-down from today's decent 2-yr note auction with below-average foreign interest contributing to the subpar outcome, though the market's overall reaction has been muted.
• Yield Check:
  • 2-yr: +1 bp to 3.93%
  • 3-yr: +2 bps to 3.88%
  • 5-yr: +2 bps to 3.97%
  • 10-yr: +2 bps to 4.41%
  • 30-yr: +3 bps to 4.95%