Bond Market Update

Auction Reaction

• Recent action saw a slip to fresh lows in the 10-yr note and shorter tenors after the U.S. Treasury followed this morning's decent $69 bln 2-yr note offering with a much weaker sale of $70 bln in 5-yr notes. The auction drew a high yield of 3.955%, which tailed the when-issued yield by half of a basis point while the bid-to-cover ratio (2.33x) was below average (2.39x). Solid foreign demand made for a silver lining with indirect takedown (72.3%) coming in well above average (63.5%).
• Yield Check:
  • 2-yr: +3 bps to 3.81%
  • 3-yr: +3 bps to 3.83%
  • 5-yr: +3 bps to 3.95%
  • 10-yr: +3 bps to 4.34%
  • 30-yr: +3 bps to 4.95%