Bond Market Update

Auction Reaction

• U.S. Treasuries hover just above session lows that were reached in mid-morning trade, having spent the past couple hours in a sideways range. Longer tenors have faced some impulse selling in immediate reaction to today's $13 bln 20-yr bond reopening, which met ok, but not great demand. The sale drew a high yield of 5.163%, which tailed the when-issued yield by half of a basis point, but the bid-to-cover ratio (2.64x vs 2.65x) was close to average while indirect takedown (69.1%) was a bit better than average (64.7%), somewhat making up for the headline miss.
• Yield Check:
  • 2-yr: +4 bps to 4.30%
  • 3-yr: +4 bps to 4.34%
  • 5-yr: +3 bps to 4.40%
  • 10-yr: +3 bps to 4.65%
  • 30-yr: +2 bps to 5.15%