Bond Market Update

Auction Reaction

• U.S. Treasuries remain in the red with the long bond sliding to a fresh low after the U.S. Treasury's $25 bln 30-yr bond sale met weak demand. The sale drew a high yield of 4.694%, which tailed the when-issued yield by a basis point. The bid-to-cover ratio (2.29x) was below the prior 12-auction average (2.40x) while indirect takedown (71.0%) was above average (62.8%), making for a silver lining to an otherwise poor finish to this week's auction slate. Shorter tenors also faced some pressure after the auction, but they remain much closer to their intraday highs.
• Yield Check:
  • 2-yr: +2 bps to 3.59%
  • 3-yr: +3 bps to 3.59%
  • 5-yr: +3 bps to 3.70%
  • 10-yr: +4 bps to 4.11%
  • 30-yr: +4 bps to 4.70%