US bonds recover as selloff pauses and solid auction lifts sentiment
TLT•US Treasuries rebounded after a sharp selloff, with the 10-year yield down 4.2 basis points to 5.269%. A three-year note auction drew decent demand and priced at a 4.932% yield.
1. Yields retreat
Treasuries rebounded Tuesday after long-term yields reached multi-decade highs in the previous session. The 10-year yield fell 4.2 basis points to 5.269%, while the 30-year yield dropped 2.2 basis points to 5.642%; the two-year yield declined 4.4 basis points to 4.789%. Investors were waiting for next week's inflation data for clues on interest rates.
2. Auction draws demand
The three-year note auction priced at a 4.932% yield, below the expected yield at the bid deadline but above the six-auction average of 4.167%. The bid-to-cover ratio was 2.62, compared with a six-auction average of 2.65, while direct bidders took 31.7% of the supply, the largest share since February. The two-year/10-year yield spread narrowed to 47.8 basis points from 48.9 late Monday.
