Bond Market Update

Auction Reaction

• Recent action saw the Treasury complex slip to fresh lows for the day alongside some renewed strength in energy prices, which has lifted WTI crude back toward $100/bbl after President Trump dismissed Iran's latest peace proposal as a non-starter. Treasuries dipped to fresh lows in immediate reaction to today's $58 bln 3-yr note sale, which met weak demand. The sale drew a high yield of 3.965%, which tailed the when-issued yield by 0.6 basis points while the bid-to-cover ratio (2.54x) was below average (2.60x). Indirect takedown (63.0%) made for a silver lining, coming in above average (57.9%). Tomorrow, the U.S. Treasury will sell $42 bln in 10-yr notes.
• Yield Check:
  • 2-yr: +4 bps to 3.93%
  • 3-yr: +4 bps to 3.96%
  • 5-yr: +5 bps to 4.06%
  • 10-yr: +4 bps to 4.41%
  • 30-yr: +3 bps to 4.98%