We start today's two-fer auction special day (there is a 5Y auction at 1pm), with another nosebleeding 2Y auction yield.
Moments ago the Treasury sold $46 billion in 2Y paper at a high yield of 3.084%, tailing the When Issued 3.077%, and the highest yield since December 2007. Just as notably, with the exception of a brief reversal in April, this was the 11th consecutive higher 2Y auction high yield.
The bid to cover of 2.509 was the lowest since March, printing below last month's 2.607%, and was well below the six-auction average of 2.63.
The internals were also disappointing, with Indirects taking down just 51.5%, the lowest since November's 45.6%; and with Dealers holding on to 23.2% of the auction, the most since January (with QE over they will have trouble disposing of this paper), Directs were awarded 25.3%, the most since March, and well above the 18.6% recent average.
Overall, this was a disappointing 2Y auction which was somewhat unexpected in light of the sharp concession today which saw yields spike as futures rose.
And now we look for the day's main event: the sale of $40BN in "bellybusting" 5Y paper at 1pm.