Bond Market Update

Auction Reaction

• Shorter-dated Treasuries trade not far below their morning highs while the long bond is now just modestly higher after a steady retreat from its high over the past four hours. While the long bond has underperformed in recent trade, this comes after its yield touched its lowest level since early March this morning. Treasuries have held their ground in immediate reaction to today's $44 bln 7-yr note offering, which made for a solid finish to an otherwise mediocre week of note sales. Today's auction was right on the screws with a high yield of 4.260% while the bid-to-cover ratio (2.50x) was right in-line with average. Indirect takedown (57.6%) was a bit light relative to average (65.3%), leaving primary dealers with their largest share of the issue in this tenor since November.
• Yield Check:
  • 2-yr: -3 bps to 4.11%
  • 3-yr: -3 bps to 4.11%
  • 5-yr: -2 bps to 4.15%
  • 10-yr: -2 bps to 4.38%
  • 30-yr: -1 bp to 4.85%