Bond Market Update

Auction Reaction

• U.S. Treasuries trade just below their best levels of the session with the 10-yr note and shorter tenors holding solid gains while the long bond is back on its flat line after reclaiming its starting loss. The past couple minutes have seen a slight dip after the U.S. Treasury completed this week's note auction slate with an underwhelming sale of $44 bln in 7-yr notes. The offering drew a high yield of 4.018%, which tailed the when-issued yield by 0.4 bps while the bid-to-cover ratio (2.45x) was below average (2.56x). Indirect takedown (66.9%), however, exceeded the prior 12-auction average (64.4%), making for some silver lining.
• Yield Check:
  • 2-yr: -3 bps to 3.55%
  • 3-yr: -3 bps to 3.62%
  • 5-yr: -3 bps to 3.81%
  • 10-yr: -2 bps to 4.24%
  • 30-yr: UNCH at 4.86%