Bond Market Update

Auction Reaction

• U.S. Treasuries have continued their steady rise, which has been paced by longer tenors. This is putting yields on 10s and 30s on track for their lowest settlement since early July, thanks in part to a recent push to fresh highs after the U.S. Treasury sold $44 bln in 7-yr notes to strong demand. The auction drew a high yield of 4.092%, which stopped through the when-issued yield by 2.6 basis points while the bid-to-cover ratio (2.79x) was well above average (2.61x). Indirect takedown (62.3%) was a bit shy of average (70.5%), but this auction made for an improvement from yesterday's sales of 2- and 5-yr notes.
• Yield Check:
  • 2-yr: -5 bps to 3.88%
  • 3-yr: -5 bps to 3.83%
  • 5-yr: -7 bps to 3.91%
  • 10-yr: -9 bps to 4.33%
  • 30-yr: -10 bps to 4.87%