One day after what may have been the strongest 3Y auction in history (and if not, then certainly one of the top 3), moments ago the Treasury sold $32BN in 10Y paper (in the form of 9Y-10M reopening of Cusip FV8), in what was another stellar auction.

The high yield of 3.575%, was the second consecutive drop since the 10Y auction peaked at 4.14% in November, and was also down from 3.625% in December. More importantly perhaps, compared to the When Issued 3.580%, today's auction stopped through by 0.5bps. This was the first 10Y auction that did not tail since August, and it certainly was better than last month's auction when the tail was a record 3.7bps:

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The bid to cover was also solid, and at 2.53 it was the highest going back to Feb 2022; clearly, it was above the six auction average of 2.32.

Finally, the internals were also impressive, with Indirects awarded 67.0%. up from 59.4% last month and the highest since August. It was also well above the 61.2% recent average. And with Directs awarded 17.9% or just below the recent average, Dealers were left with 15.1%, the lowest since August.

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Overall, this was another stellar 10Y auction and when combined with yesterday's blowout 3Y, it indicates that bond traders are not all nervous about surprises in tomorrow's CPI report.

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