One day after a solid 3Y auction priced "on the screws", moments ago the Treasury sold $32BN in a 9-year 10-month Reopening of 10Y cusip GM7. Cutting to the case: it wasn't ugly but it could have been better.

Stopping at a high yield of 3.455% - the lowest since September and 53bps below the March yield - the auction tailed the 3.435% When Issued by 2bps, which may sound like a lot but it's actually better than last month's 2.7bps tail, and also better than December's 3.7bps as well as November's 3.4bps. Needless to say, the last few benchmark auctions have not been a walk in the park.

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The bid to cover was 2.36, unchanged from last month's 2.35 and just below the six-auction average of 2.40.

The internals were also an improvement to the March auction, with Indirects (or foreign bidders) taking down 63.0%, up from 62.3%, if also just under the recent auction average of 63.75%. And with Directs taking down 19.9%, above the six auction average of 18.9% and flat from the previous month, Dealers were left with 17.1% of the auction, not that far off the recent average.

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Bottom line: this was another solid auction, yet perhaps due to the sharp repricing in yields in the middle of the day, which saw 10Y rates rise from 3.34% to 3.46%, the auction ended up with a modest tail. Then again, since the auction could have been far worse, it's not surprising that yields tightened by about 1bp after the results hit as markets were relieved it wasn't even worse.

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