Bond Market Update

Auction Reaction

• U.S. Treasuries trade on their lows after a steady extension of their starting losses. The market put together a bounce attempt during the first couple hours of action, but resistance was found well before Treasuries reached their flat lines, followed by a slide to fresh lows. The Treasury complex hit worst levels of the session after the U.S. Treasury completed this week's dismal note auction slate with another poor sale. The $44 bln 7-yr note offering drew a high yield of 4.255%, which tailed the when-issued yield by nearly a basis point while the bid-to-cover ratio (2.43x vs 2.53x average) and indirect takedown (62.6% vs 64.2% average) were below average.
• Yield Check:
  • 2-yr: +8 bps to 3.96%
  • 3-yr: +9 bps to 3.97%
  • 5-yr: +11 bps to 4.08%
  • 10-yr: +8 bps to 4.41%
  • 30-yr: +5 bps to 4.95%