Bond Market Update

Auction Reaction

• U.S. Treasuries hover just below highs that were reached in mid-morning trade with shorter tenors maintaining their lead while the long bond lags, holding a slim loss. That said, the front end has faced some recent pressure after the U.S. Treasury kicked off this week's note and bond auction slate with a weak $58 bln 3-yr note sale. The auction drew a high yield of 3.579%, which tailed the when-issued yield by 1.1 bps while the bid-to-cover ratio (2.55x vs 2.62x average) and indirect takedown (59.8% vs 63.2% average) were below average.
• Yield Check:
  • 2-yr: -3 bps to 3.56%
  • 3-yr: -4 bps to 3.57%
  • 5-yr: -4 bps to 3.70%
  • 10-yr: -2 bps to 4.12%
  • 30-yr: +1 bp to 4.75%