Bond Market Update

Auction Reaction

• U.S. Treasuries hover just below highs that were reached about an hour ago with longer tenors back out in the lead. Intraday action has seen some shifting leadership with the belly taking a brief lead, but the pace of the advance has been slow. The 2-yr note underperforms slightly today, but it too trades just shy of its midday high, holding steady in immediate reaction to today's $69 bln 2-yr note sale, which met good demand. The auction drew a high yield of 4.204%, stopping through the when-issued yield by 0.4 bps while the bid-to-cover ratio (2.60x vs 2.61x) and indirect takedown (66.0% vs 57.6% average) were above average. The U.S. Treasury will continue this week's offering slate with a $70 bln 5-yr note auction tomorrow.
• Yield Check:
  • 2-yr: -4 bps to 4.20%
  • 3-yr: -4 bps to 4.26%
  • 5-yr: -6 bps to 4.35%
  • 10-yr: -6 bps to 4.64%
  • 30-yr: -6 bps to 5.17%