Bond Market Update

Auction Reaction

• U.S. Treasuries trade at their best levels of the session, sending yields on the 5-yr note and longer tenors to fresh lows for the month. Treasuries built on their starting gains through the morning as equities struggled, extending to fresh highs after the U.S. Treasury capped this week's note and bond auction slate with an excellent sale of $25 bln in 30-yr bonds. The offering drew a high yield of 4.750%, which stopped through the when-issued yield by 2.1 bps while the bid-to-cover ratio (2.66x vs 2.36x average) and indirect takedown (69.9% vs 63.4% average) were well above average.
• Yield Check:
  • 2-yr: -5 bps to 3.46%
  • 3-yr: -6 bps to 3.51%
  • 5-yr: -7 bps to 3.67%
  • 10-yr: -6 bps to 4.11%
  • 30-yr: -7 bps to 4.75%