Following yesterday's abysmal 3 Year auction, many rates investors were on edge ahead of today's 10 Year auction in the aftermath of the weakness across the curve seen since the "stellar" jobs report which had dragged yields higher across the curve. It turned out fears were premature, and moments ago the $24 billion reopening of 10 Years priced at a yield of 2.304%, which while highest since June, priced 0.8bps through the When Issued showing surprising demand for paper.
Also, unlike yesterday, the Bid to Cover did not tumble and instead was virtually unchanged from last month's 2.59, dipping fractionally to just 2.58%, in line with the TTM average of 2.65%.
Finally, the internals showed that just like yesterday Direct interest picked up, with 14.3% of the auction taken down by Direct Dealers, most since May, and 60.5% going to Indirects, which aside from October's 62.2% was the highest since December 11. This left just 25.2% for Dealers whose take down was the lowest since May.
Overall a very strong auction, and one which showed that rumors of the death of the Treasury market are once again premature.
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