Bond Market Update

Auction Reaction

• U.S. Treasuries continue hovering near their flat lines with the long bond and the 10-yr note showing some relative strength while the short end lags. Intraday action has been largely uneventful with the Treasury complex sticking to a sideways range and showing almost no reaction to the just completed $44 bln 7-yr note sale, even though the sale met weak demand. The offering drew a high yield of 3.790%, which tailed the when-issued yield by 0.8 basis points while the bid-to-cover ratio (2.46x vs 2.62x average) and indirect takedown (59.0% vs 68.5%) were well below average, making for a poor finish to this week's underwhelming note offering slate.
• Yield Check:
  • 2-yr: UNCH at 3.50%
  • 3-yr: -1 bp to 3.50%
  • 5-yr: UNCH at 3.62%
  • 10-yr: -1 bp to 3.99%
  • 30-yr: -2 bps to 4.55%