Ugly, Tailing 3Y Auction Leaves Bitter Taste Ahead Of Today’s 10Year Sale

Ugly, Tailing 3Y Auction Leaves Bitter Taste Ahead Of Today’s 10Year Sale

In the first of today’s auction doubleheader, moments ago the US Treasury sold $41 billion in 3Y paper in a rather lousy auction (the benchmark 10Y is for sale at its usual 1pm auction time later today).

The auction stopped at a high yield of 3.564%, a big jump from last month’s 3.202, the highest since the global financial crisis, and tailed the when issued 3.550% by 1.4bps, the biggest tail since March 2020 when the world was ending over the covid lockdown closures.

The bid to cover of 2.494, was unremarkable, below last month’s 2.501 but above the 6-auction average of 2.475.

The internals were uglier, with Indirects awarded just 54.5%, the lowest since June and well below last month’s 63.1%; they were also well below the recent average of 57.6. And with Directs taking down a sizable 21.9%, one of the highest in recent history, with just June’s 23.6% higher going back all the way to Dec 2019, Dealers were left holding 23.6%, the highest since June.

Overall, an ugly auction and one which did not help the bond market which saw yields move higher into the deadline, with some angst creeping into the market ahead of today’s 10Y auction in just over an hour.

Tyler Durden
Mon, 09/12/2022 – 11:56

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