Bond Market Update

Auction Reaction

• U.S. Treasuries continue hovering just below session highs that were notched about two hours ago, thanks in part to a deepening of the pullback in the price of oil, which is now back below $98/bbl. The Treasury complex remains just shy of today's highs in immediate reaction to today's $16 bln 20-yr bond auction, which met good demand. The sale drew a high yield of 5.122%, which was right on the screws while the bid-to-cover ratio (2.55x vs 2.64x average) was below average. Indirect takedown (67.7%), however, was above average (64.4%).
• Yield Check:
  • 2-yr: -7 bps to 4.05%
  • 3-yr: -9 bps to 4.12%
  • 5-yr: -9 bps to 4.24%
  • 10-yr: -8 bps to 4.58%
  • 30-yr: -7 bps to 5.12%