Bond Market Update

Auction Reaction

• U.S. Treasuries trade just below their highs that were reached about an hour ago, putting yields on 10s and 30s on track for multi-week low settlements. The market has held steady in immediate reaction to today's $70 bln 5-yr note sale, even though the auction met soft demand. The high yield tailed the when-issued yield by nearly a basis point while the bid-to-cover ratio (2.35x vs 2.38x average) and indirect takedown (61.6% vs 63.9% average) were below average. The Treasury will complete this week's note auction slate with a $44 bln 7-yr note sale tomorrow.
• Yield Check:
  • 2-yr: -4 bps to 4.15%
  • 3-yr: -6 bps to 4.15%
  • 5-yr: -7 bps to 4.19%
  • 10-yr: -8 bps to 4.41%
  • 30-yr: -8 bps to 4.86%