Bond Market Update

Auction Reaction

• Recent action saw a slip to fresh lows in longer tenors while the 5-yr note and shorter tenors hover a bit above their morning highs and below their starting levels. Intraday action was very subdued until a recent jolt that resulted from a weak $16 bln 20-yr bond auction. The just completed sale drew a high yield of 4.664%, which tailed the when-issued yield by two basis points. The bid-to-cover ratio (2.36x) was below average (2.64x) while indirect takedown (55.2%) was also below average (65.3%).
• Yield Check:
  • 2-yr: +2 bps to 3.46%
  • 3-yr: +2 bps to 3.49%
  • 5-yr: +3 bps to 3.65%
  • 10-yr: +3 bps to 4.08%
  • 30-yr: +2 bps to 4.70%