Bond Market Update

Auction Reaction

• U.S. Treasuries have risen off lows that were reached about 90 minutes ago, but they continue trading below their starting levels. The market is staying above session lows even though the just completed $44 bln 7-yr note sale met weak demand. The auction drew a high yield of 3.953%, which tailed the when-issued yield by 0.6 basis points while the bid-to-cover ratio (2.40x vs 2.62x average) and indirect takedown (56.4% vs 69.7% average) were below average, making for a poor finish to this week's note auction slate.
• Yield Check:
  • 2-yr: +6 bps to 3.66%
  • 3-yr: +5 bps to 3.65%
  • 5-yr: +5 bps to 3.76%
  • 10-yr: +3 bps to 4.18%
  • 30-yr: +1 bp to 4.77%