Bond Market Update

Auction Reaction

• U.S. Treasuries hover a bit below session highs that were notched alongside a weak open in equities. The belly took the lead as stocks opened in poor fashion, and it has stayed slightly ahead since then. Today's rally has received some added encouragement from the just completed $44 bln 7-yr note sale, which was an improvement from this week's mediocre 2- and 5-yr note offerings. The 7-yr auction drew a high yield of 3.790%, which was right on the screws. However, the bid-to-cover ratio (2.50x vs 2.54x average) and indirect takedown (63.6% vs 64.4% average) were a touch below average.
• Yield Check:
  • 2-yr: -3 bps to 3.44%
  • 3-yr: -4 bps to 3.45%
  • 5-yr: -4 bps to 3.58%
  • 10-yr: -3 bps to 4.02%
  • 30-yr: -2 bps to 4.67%