Bond Market Update

Auction Reaction

• U.S. Treasuries hover just below their opening levels after retreating from session highs that were reached about 90 minutes after the market received the PPI report for May. This has made for another sideways session with yields just below their highest levels of the year. Recent action saw some impulse selling in longer tenors that was quickly reversed, after the U.S. Treasury completed this week's mediocre note and bond offering slate with a weak $22 bln 30-yr bond reopening. The sale drew a high yield of 5.020%, which tailed the when-issued yield by more than a basis point while the bid-to-cover ratio (2.33x vs 2.39x average) and indirect takedown (60.0% vs 64.9% average) were below average.
• Yield Check:
  • 2-yr: +1 bp to 4.14%
  • 3-yr: +1 bp to 4.19%
  • 5-yr: UNCH at 4.26%
  • 10-yr: -1 bp to 4.53%
  • 30-yr: -2 bps to 5.01%