11.3 C
New York
Thursday, March 23, 2023


Ugly, Tailing 10Y Treasury Auction Spikes Yields Near Session Highs

One month after one of the strongest 10Y auctions in history (which followed two months after one of the ugliest ones), today’s 9-year 11-month reopening was another ugly affair as markets and traders rush from one sentiment extreme to the other.

According to the Treasury, today’s sale of $32BN in 10Y notes (technically 9Y-11M reopening), priced at a high yield of 3.985%, which was 30bps higher than February’s 3.643% and also tailed the When Issued 3.958% by 2.7bps. As shown below, the 10Y has seen some dramatic tails and stop throughs, and in the past 5 auctions, 4 have seen a tail or stop through of more than 2bps, a degree of volatility that had never been seen before.

The bid to cover slumped to 2.35, down from 2.66 in February, and below the six-auction average of 2.41.

The internals were also ugly, with Indirects tumbling from last month’s record high 79.5%, to just 62.3%, which was the lowest since December and below the recent average of 63.8%. And with Directs awarded 20%, Dealers were left holding 17.7%, the most since December.

In kneejerk response, 10Y yields in the secondary market – which had traded slightly lower for much of the US session – spiked and rose above 3.98% approaching the high yield on the auction, and also nearing the highs of the session which are just north of 4.00%, with the move hurting risk assets and spoos drifting lower and also approaching session lows.

This post was originally published on this site

Notify of
Inline Feedbacks
View all comments

Stay Connected


Latest Articles

Would love your thoughts, please comment.x