Bond Market Update

Auction Reaction

• U.S. Treasuries have dipped from their morning highs, but the pullback has been shallow, leaving all tenors with the bulk of today's gains. The complex is holding just above intraday lows after the U.S. Treasury launched this week's note auction slate with a solid sale of $69 bln in 2-yr notes. The auction drew a high yield of 4.071%, which was right on the screws while the bid-to-cover ratio (2.64x) was above average (2.60x). Indirect takedown (57.6%) was a touch below average (57.9%), making for a small blemish. Tomorrow, the U.S. Treasury will sell $70 bln in 5-yr notes.
• Yield Check:
  • 2-yr: -5 bps to 4.07%
  • 3-yr: -5 bps to 4.12%
  • 5-yr: -6 bps to 4.20%
  • 10-yr: -6 bps to 4.50%
  • 30-yr: -3 bps to 5.03%