Strong Demand For 10Y Treasury Auction Soaks Up Massive Debt Supply

Having earlier sold 3Y Notes and 6M Bills to a surprisingly eager market in two rather strong auctions, at 1:01pm the Treasury concluded today's sale of $145 billion in paper, with the sale of $51BN in 3M Bills and $21 billion in 10Y Notes, in two more strong auctions.

The high yield of 2.889% was on the screws with the When Issued, and 9bps above February's 2.811%. It was also the highest yield since January 2014.

The Bid to Cover was 2.50%, above last month's 2.34 and also above the 2.45% auction average. The internals were also on the strong side, with the Indirects taking down 66.2%, which slightly below February's 67.5% was above the 6 month average of 64.8%. Directs were awarded 6.5%, just higher than the 5.4% last month, leaving 27.3% for Dealer.

Separately, the Treasury also sold $51.0b in 3M bills, at a bid-to-cover of 3.13, well above the 2.95 6 auction average. And refuting speculation that foreigners are fleeing Bills, Indirect bidders were awarded 44.7% of the takedown vs six previous auction average 41.5%.

Overall, today's massive supply was soaked up without a glitch, and with far less concessions than many had expected.

As a result, the TSY complex held gains after today's auctions, with muted price action following the 10Y auction, and with the 10Y yield lower on the day by ~0.5bp.