Solid 10Y Auction Stops Though With Most Direct Bidders Since October

One day after a stellar 3Y auction, moments ago the Treasury sold $39BN in a 10Y reopening of 9-Year, 10-Month cusip KQ3 in another very strong auction confirming that there are zero concerns about tomorrow’s CPI print, which the street clearly expects to come in below estimates.

The high yield on today’s auction was 4.276%, well below last month’s 4.438% and the lowest since May; it also stopped through the 4.286% When Issued by 1basis point, the second consecutive stop in a row.

While the bid to cover was 2.575, dropping from 2.67 in June, it was above the 6-auction average of 2.52.

The internals were also solid with Indirects taking down 67.6%, also down from the near record 74.6% in June but above the 67.2 recent average. And with Directs grabbing a generous 20.9% of the allotment, the highest since Oct 23, Dealers were left with just 11.5% of the auction the lowest since last August.

Overall, this was a solid auction and one which helped push yields lower from session highs of 4.30% reached just moments prior to the sale.