Solid 10Y Auction Stops Through Despite Growing Reflation Fears

While there were some concerns about the demand ahead of today's 10Y auction, they quickly evaporated after today's CPI miss which promptly pushed yields to session lows amid a bout of short-covering, which eliminated fears about chasing into the auction or unmet concessions. And sure enough, moments ago, as part of the month's refunding, the Treasury sold a record $41 billion in 10Y notes, matching the all-time notional high from November.

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The auction priced at a high yield of 1.1550%, stopping through the When Issued 1.157% by 0.2bps, and down slightly from last month's 1.164% if a far cry from the record low yields hit in early 2020.

The Bid To Cover of 2.37 which while down from last month's 2.45, was inline with the 2.38 six-auction average.

The internals were also in line, with Indirects taking down 60.6%, slightly lower than the January 62.2% and the recent average of 61.0%. And with Directs taking down 18.9%, Dealers were left holding 20.5%.

Overall, a solid if completely unremarkable 10Y auction, which is probably good news for a market where fears of rampant inflation - and much higher yields in the future - are now all the rage.

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