Tailing 10Y Auction Sees Sufficient Demand To Avoid Puke

Shortly after today’s first bond auction, the $58BN in 3Y notes which saw brisk demand at 1130am ET this morning, moment ago the US Treasury held the second coupon sale for the day when it sold $38 billion in a closely watch 9-year 10-month reopening.

This auction was less enticing to buyers, stopping at a yield of 1.680%, which was the highest since January 2020 and also tailed the When Issued 1.678% by 0.2bps.

The bid-to-cover of 2.36 was in line with recent auctions, which have averaged 2.39 in the past 5 months, if the lowest since December.

The internals were a little better, with Indirects taking down 59.6% of the auction, up from 56.8% and in line with the recent average of 60.0%. And with Directs taking down 16.2%, or the lowest since December as well, Dealers were left holding 24.2%, almost exactly on top of the recent average.

Overall, a mediocre, forgettable auction, however good enough to avoid a market puke, and certainly nowhere close to the devastation unleashed by the catastrophic, infamous 7Y auction at the end of February which started the March bond market turmoil.