After yesterday’s solid 3Y auction, the market considered the results briefly, pushed yields lower for about a basis point and then saw the recent move wider in yields extend overnight, with some wondering if yesterday’s auction success would be repeated in today’s sale of $39BN in 10Y notes (specifically a reopening of 9Year-11Month cusip CLW9). The answer was yes and then some.Pricing at a high yield of 4.235%, down from last month’s 4.347%, the auction stopped through the When Issued 4.250% by 1.7bps, an improvement to last month’s 0.3bps through and the biggest stop through since June. 
The bid to cover was a whopper: rising to 2.70 from 2.58 in November, and the highest since June 2016!The internals were also solid, with Indirects awarded 70.0 up from 61.7 in Novemberif just below the six-auction average of 70.6. And with Directs taking down 19.5%, Dealers were left holding just 10.5% of the auction, the lowest since September. 
Overall, this was a stellar 10Y auction, one which impressed on virtually all metrics and yet even though there was a kneejerk move lower in the 10 Yield , which dipped to 4.23% from 4.25% before the result, yields have since pushed right back up and the 10Y was back at 4.25% at last check as the market starts realizing that after the December rate cut… that’s pretty much it for the Fed’s easing cycle.More By This Author:Re-Inflation Continues – November Consumer Prices Surge Most Since April
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