Today's $32 billion 3 Year auction closed and confirmed that the deterioration in sentiment toward bonds is picking up. The auction priced at a high yield of 0.862%, an exactly 50% jump compared to last auction's 0.575%. More concerning, the Bid To Cover came at 2.906, the lowest BTC since February's 2.83, and compared to the LTM average of 3.115%. The indirect take down was weak, at just 36.7, although better than the 29% from two months ago. What was surprising is that Direct Bidders took down a whopping 18%, or $5.7 billion of the auction, relative to $13.7 billion submitted. Altogether a weak auction, and one that confirms that while the belly is very weak today (the 10 Year was trading north of 3.1% last), the wings are also taking on water. The only question is whether the steepness of the 7s30s and 10s30s can be preserved. For the time being the belly is widening more than the 30 Year, making life for the banks unpleasant.