Bond Market Update

Auction Reaction

• U.S. Treasuries trade on lows with yields on the 10-yr note and shorter tenors back near their March highs while the 30-yr yield is revisiting its highest level from last week. Today's selling has taken place alongside a steady retreat in equities after they soared to fresh record highs. The price of oil has remained above $101/bbl, weighing on overall sentiment on a day when the market learned that CPI accelerated to 3.8% year-over-year in April. The U.S. Treasury just completed today's $42 bln 10-yr note sale, seeing soft demand. The sale drew a high yield of 4.468%, which tailed the when-issued yield by 0.4 basis points while the bid-to-cover ratio (2.40x vs 2.50x average) and indirect takedown (64.0% vs 69.4% average) were below average. The U.S. Treasury will complete this week's auction slate with a $25 bln 30-yr bond sale tomorrow.
• Yield Check:
  • 2-yr: +4 bps to 3.99%
  • 3-yr: +5 bps to 4.02%
  • 5-yr: +5 bps to 4.12%
  • 10-yr: +5 bps to 4.46%
  • 30-yr: +3 bps to 5.02%