Bond Market Update

Auction Reaction

• Shorter-dated Treasuries reached fresh lows in recent trade, before seeing a slight bounce after the U.S. Treasury sold $69 bln in 2-yr notes to solid demand. The sale drew a high yield of 3.920%, which stopped through the when-issued yield by half of a basis point. The bid-to-cover ratio (2.62x) was a touch below average (2.64x) and so was indirect takedown (55.3% vs 69.3% average), but direct bidders picked up the slack, leaving primary dealers with a smaller share of the issue than a month ago. The U.S. Treasury will also sell 5-yr notes this afternoon, looking to squeeze in this week's note auctions before Wednesday's FOMC Decision.
• Yield Check:
  • 2-yr: +1 bp to 3.93%
  • 3-yr: +3 bps to 3.89%
  • 5-yr: +3 bps to 3.98%
  • 10-yr: +3 bps to 4.42%
  • 30-yr: +3 bps to 4.95%