Tailing 30Y Auction Prices At Highest Yield In 25 Years

After yesterday's ugly 10Y auction, moments ago we got the last of the week's refunding auctions, when the Treasury sold $25BN in 30Y paper (the same paper that has seen yield shoot up in the past week, ever since Warsh's most recent FOMC meeting in which he left the long-end hang out to dry), and just like the 10Y auction before it, this one was also rather deplorable.

Pricing at a high yield of 5.216%, the auction tailed the When Issued 5.212% by 0.4bps...

... but more importantly, it priced at the highest yield since 2001 some 25 years ago.

The bid to cover was 2.392, down from 2.444 in July and below the recent average of 2.429. 

The internals were more palatable: Indirects slumped from 77.7% in July - one of the highest on record - to 66.9%, which was just below the six-auction average of 67.0%.

And with Directs loading up, and taking down 21.6% of the auction, which also was just below the recent average of 22.5%, Dealers were left with 11.5%, 150bps higher than July, and a bit over the average of 10.6%. 

Overall, this was a weak auction if hardly catastrophic, and while demand was there, the more ominous question is where do yields go from here, and how much higher can the yield on the long-end keep rising before something finally breaks.