• 10yr Treasury Auction
  • 0.849% vs 0.855% expectation from just before the auction.
  • Bid-to-cover 2.36x vs 2.45x average
  • Indirects 61.0 vs 59.8 avg
  • Dealers took 29.8% vs 25.6% avg

This was a much better auction than yesterday's 3yr flavor and it suggests bonds had done enough to get in position for the supply.  Especially noteworthy is the relatively close-to-avg performance in the dealer takedown.  When dealers are forced to take much more than normal, it is often bad for rates after the auction.

10s are down a quick 5bps to .801 (unchanged on the day).  2.5 UMBS are also close to unchanged at 101-16 (101.5).  That's more than half a point off the day's lows but still nearly half a point below the day's highs.

Best case scenario, we just saw a clue as to where bond sellers are starting to reconsider and where bond buyers are starting to see value (i.e. under 0.9% in 10yr yields).  That's just today, but it's better than a sharp stick in the eye (or whatever else we were seeing an hour ago).