Bond Market Update

Auction Reaction

• U.S. Treasuries trade a bit below their rebound highs with the long bond sitting just below its unchanged level. The market has spent the past couple hours in a sideways range while the past few minutes have seen some buying with shorter tenors at the forefront of the move, thanks to a solid $58 bln 3-yr note sale. The sale drew a high yield of 3.579%, which stopped through the when-issued yield by a basis point, while the bid-to-cover ratio (2.85x vs 2.61x average) was comfortably above average. However, indirect takedown (63.0% vs 65.0% average) was below average. The U.S. Treasury will follow today's sale with a $42 bln 10-yr note sale on Wednesday.
• Yield Check:
  • 2-yr: +2 bps to 3.58%
  • 3-yr: +2 bps to 3.59%
  • 5-yr: +2 bps to 3.70%
  • 10-yr: +2 bps to 4.11%
  • 30-yr: UNCH at 4.70%