Bond Market Update

Auction Reaction

• U.S. Treasuries continue hovering just below their opening levels, making for quiet intraday trade. The market established today's trading range within the initial hour of action, and it remains inside that range going into the early afternoon. The U.S. Treasury just completed this week's second note sale, which was a bit worse than yesterday's 2-yr note offering. Today's $70 bln 5-yr note auction drew a high yield of 4.182%, which tailed the when-issued yield by a tenth of a basis point while the bid-to-cover ratio (2.34x) was below average (2.38x). Indirect takedown (74.9%), however, was comfortably above average (64.2%).
• Yield Check:
  • 2-yr: -1 bps to 4.04%
  • 3-yr: -2 bps to 4.08%
  • 5-yr: -1 bp to 4.17%
  • 10-yr: -1 bp to 4.48%
  • 30-yr: -1 bp to 5.02%