Bond Market Update

Auction Reaction

• U.S. Treasuries have continued drifting inside a narrow sideways range with a slight upward bias that is keeping the Treasury complex in positive territory. The market has held steady despite volatility in equities, which has caused the S&P 500 (+0.4%) to give back more than half of its early gain. The U.S. Treasury just completed a $13 bln 20-yr bond reopening, which met strong demand. The sale drew a high yield of 4.846%, stopping through the when-issued yield by a basis point while the bid-to-cover ratio (2.86x) was above average (2.63x). Indirect takedown (64.7%) was a touch below average (65.7%).
• Yield Check:
  • 2-yr: -1 bp to 3.59%
  • 3-yr: -2 bps to 3.66%
  • 5-yr: -2 bps to 3.84%
  • 10-yr: -3 bps to 4.27%
  • 30-yr: -2 bps to 4.90%