Bond Market Update

Auction Reaction

• U.S. Treasuries trade just below their best levels of the day after adding to their opening gains in morning trade. Today's advance has pressured the 2-yr yield from its highest settlement of the year while yields on longer tenors are back near their opening levels from Monday's session amid some defensive action in technology stocks on Wall Street. The U.S. Treasury just completed its first note auction of the week, selling $69 bln in 2-yr notes to good demand. Today's sale drew a high yield of 4.189%, which stopped through the when-issued yield by 0.3 bps. The bid-to-cover ratio (2.64x) was just above average (2.61x) while indirect takedown (55.5%) was a bit below average (57.7%). Today's sale will be followed by a $70 bln 5-yr note auction tomorrow.
• Yield Check:
  • 2-yr: -4 bps to 4.19%
  • 3-yr: -5 bps to 4.20%
  • 5-yr: -4 bps to 4.25%
  • 10-yr: -3 bps to 4.48%
  • 30-yr: -2 bps to 4.93%