Ugly, Tailing 20Y Auction Pushes Treasury Yields To Session High

Now that every new Treasury auction is a record-size to keep up with the unprecedented deficit funding needs of the US, moments ago the sale of 20Y bonds continued this trend when Treasury sold $27 billion in 20Y paper, up $5 billion from October and the biggest size for this tenor in history.

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What was more notable, however, than the auction's record size was just how ugly it was: today's sale of 20Y paper had the worst metrics since its May return from hibernation back in 1986.

First, starting at the top, the high yield of 1.422% was not only the highest in recent history but also tailed the When Issued 1.413% by 0.9%: the most since August.

The bid to cover was even uglier, sliding from 2.43 to 2.27, also the lowest since the 20Y return 7 months ago.

Finally, the internals were mediocre with Indirects taking down 61.2%, down from 62.9% in October, and below the 6-auction average of 62.6%. And with Directs taking down 15.3%, or in line with recent auctions, Dealers were left holding 23.5%, just above the recent average of 23.2%.

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