Bond Market Update

Auction Reaction

• U.S. Treasuries trade on their highs after rising past their starting levels about an hour ago. Today's early action saw some backtracking from highs, but the market quickly found support once the belly briefly returned to little changed. With the recent push, the 10-yr yield is now back at its 50-day moving average (4.423%) while the 30-yr yield is now only slightly above its low from May (4.917%). Treasuries are holding at highs in immediate reaction to today's $13 bln 20-yr bond reopening, which met solid demand. The sale drew a high yield of 4.927%, which stopped through the when-issued yield by a basis point while the bid-to-cover ratio (2.75x vs 2.65x average) and indirect takedown (71.6% vs 64.3% average) were above average.
• Yield Check:
  • 2-yr: -3 bps to 4.04%
  • 3-yr: -3 bps to 4.08%
  • 5-yr: -4 bps to 4.15%
  • 10-yr: -4 bps to 4.43%
  • 30-yr: -4 bps to 4.93%