Bond Market Update

Auction Reaction

• U.S. Treasuries hover near their best levels of the session with the long bond sitting a bit farther from its high than other tenors. The market has spent the early afternoon just shy of morning highs, seeing a minimal response to the just-completed $16 bln 20-yr bond sale. The auction met ok demand, drawing a high yield of 4.876%, which stopped through the when-issued yield by a tenth of a basis point. The bid-to-cover ratio (2.54x) was a touch below average (2.58x) while indirect takedown (60.6%) was also below average (67.6%), continuing the recent trend of underwhelming foreign demand.
• Yield Check:
  • 2-yr: -3 bps to 3.72%
  • 3-yr: -3 bps to 3.68%
  • 5-yr: -3 bps to 3.79%
  • 10-yr: -2 bps to 4.28%
  • 30-yr: -1 bp to 4.89%