Yields Hit Session High After Ugly, Tailing 30Y Auction

Detailed summary

Overall, this was another ugly auction, and while not quite as bad as the 10Y earlier this week, which was truly ghastly, it was ugly enough to add insult to Jensen injury, pushing 10Y yields to session highs above 5.10%, and back into "oops rates did it again" territory.

Amid the now daily firehose of news, the US Treasury managed to sneak in an auction of $25 billion in 30Y paper, and while not as ugly as Tuesday's terrible 10Y auction, today's auction was not pretty... at all.

Stopping at a high yield of 5.441T%, the yield dipped from last month's 5.618% largely thanks to the uniform drop across the yield curve following the recent turmoil in the AI space (which means less competition for long end paper amid AI companies), but it tailed the 4.437% by 0.4bps, the biggest tail since June and the second highest since last November.

The bid to cover was 2.401, down from 2.542 and the lowest since August and below the six auction average of 2.437%. Not terrible, not great.

The internals, likewise, could have been better: Indirects slid from 72.3% to 68.1%, which was also below the recent average of 70.5% (in fact the lowest since August too), but nowhere near as bad as the 10Y auction two days ago. And with Directs taking 20.5%, or about unchanged from last month's 20.9%, Dealers were left holding 11.4%, the highest since June.

Overall, this was another ugly auction, and while not quite as bad as the 10Y earlier this week, which was truly ghastly, it was ugly enough to add insult to Jensen injury, pushing 10Y yields to session highs above 5.10%, and back into "oops rates did it again" territory.

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