Bond Market Update

Auction Reaction

• Recent action saw an extension of the bounce in Treasuries with the 10-yr yield now up just one basis point from last week's settlement while the 5-yr note is back on its unchanged level. Treasuries climbed steadily during the 90 minutes that followed today's 3-yr note sale, and they remain just below their highs in immediate reaction to the just completed $39 bln 10-yr note sale. The auction drew a high yield of 4.173%, which stopped through the when-issued yield by 0.7 basis points while the bid-to-cover ratio (2.55x) was just above average (2.54x). Indirect takedown (69.6%), however, was a bit on the light side of average (70.6%).
• Yield Check:
  • 2-yr: UNCH at 3.54%
  • 3-yr: -1 bp to 3.59%
  • 5-yr: UNCH at 3.75%
  • 10-yr: UNCH at 4.18%
  • 30-yr: +1 bp to 4.83%