Recent Treasury auctions have highlighted significant market stress, with particularly poor outcomes for both 3-year and 10-year note sales. The 3-year note auction saw a yield of 4.528% before the sale of $58 billion worth of notes, which then closed at a slightly higher yield of 4.548%, indicating a lackluster reception from the market. The 10-year note auction was even more problematic, with a $39 billion sale resulting in a 3.1 basis points 'tail' (4.600% highs - 4.529% when issued), the highest since December 2022, and the 3rd largest on record. The dealer takedown reached 24%, the most significant since November 2022. This auction's bid-to-cover ratio fell to 2.34, below the one-year average of 2.49, and foreign bidder participation dropped to 62% from 71% in February. These indicators, alongside the largest one-day spike in the 10-year yield since the COVID-19 panic, up 19 basis points, and being the worst day for US 10-year Treasuries since May 2023, underscore the market's current challenges. Analysts have attributed this turbulence to a combination of factors, including a hot CPI report and a general market rejection of the offered notes.
Observable stress in the Treasury market is back. @pboockvar reports: "After a weak 3 yr note auction seen yesterday, the 10 yr auction today was bad. It tailed by 3 bps, rather big, to yield 4.56%. Also, the bid to cover of 2.34 was well below the one year average of 2.49.…
US 10-year Treasuries are having their worst day since May 2023, with yields surging after the one-two punch of a hot CPI and a bad auction. @pboockvar: "10 yr auction was bad...Dealers were left with 24% of the auction, which is the most since Nov. 2022." https://t.co/bPiQPP6NE4
Another ugly Treasury auction, this time in the 10YR. Some will blame the CPI this am, but there's no sugar coating here: - Tail was 3.1 bps vs. *0.7 bps avg* of last 6 auctions - Foreign bidders *dropped to 62%* from 71% in Feb. - Bid to Cover was a *measly 2.34* vs 2.52… https://t.co/vlr1i9v0RO
This was the worst 10 year treasury auction in 2 years
Treasury's $39 billion sale of 10-year notes goes poorly https://t.co/vlSlZIPUSj
Horrific day for US Treasuries. Hot CPI sent 10s higher, then the 10s auction had a 24% dealer takedown and tailed 3.1 bps, the largest tail since Dec. 2022 and 3rd largest on record. The biggest one-day spike in the 10-year yield since the COVID panic, up 19 bps and climbing: https://t.co/01eBxwTQb0
A "wide tail" is a key characteristic of a bad bond auction. In the 10-Year Auction that just occurred, the tail was 3.1 bps (4.600% highs - 4.529% when issued), the highest since Dec. 2022 The "tail" matters because it reflects the willingness of buyers to step up to the…
Weak $39 billion 10-year Treasury auction: 3.1 bps tail + dealers took 24% (vs 15.7% avg), most since Nov 2022 [per BMO] https://t.co/yIyq9eI2K6
Bad 10yr auction… 3+ bps tail. 24% dealer takedown. Total rejection by the market.
The Treasury sale of $58 billion 3 Year Notes was poor. The yield at 4.548% is a full two basis points higher in yield than the market at the bidding deadline.
🔴 TREASURY WI 3Y YIELD 4.528% BEFORE $58 BILLION AUCTION.