With today's 10 Year auction just an hour ahead of the traditionally negative for rates FOMC Minutes, it was no surprise that the just completed issuance of $21 billion in 10 Year paper was nothing to write home about. Sure enough, with a high yield of 2.72% tailing the When Issued by 0.8 bps or the biggest tail for a 10Y auction in 2014, the reception was hardly impressive. That said, the yield was still 1 bp lower than the March auction when bonds sold for 2.73%, which in the aftermath of yesterday's wider 3Y, confirmed that flattening is still on everyone's mind.The Bid To Cover was also hardly notable and while it was below March's 2.92, it was well above the TTM average of 2.66 at 2.76.
Internals were hardly anything to write home about either, as Dealers took down just over 40%, the most in 2014, even as Indirects were allotted 44.7% meaning Directs had only 15.2% of the allotment, the least since January.
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Bottom line: unlike equities which are back into euphoria mode, the 10 Year promptly sold off on the auction news, which kneejerk momentum we assume will continue after the FOMC minutes due out shortly.
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