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After two stellar auctions, where both Tuesday's 3Y and yesterday's 10Y sale may have been two of the best auctions in history for the respective tenors, moments ago the Treasury concluded the week's coupon issuance when it sold $22BN in 30Y paper in a decidedly uglier sale.

The auction stopped with a high yield of 4.015%, 30bps below last month's stop and the lowest since July 2023, but the auction also tailed the When Issued 4.001 by 1.4bps, the 3rd consecutive tail in a row.

The bid to cover was 2.376, a modest rebound from last month's 2.31 but below the six-auction average of 2.39.

The internals were ever so slightly better, with Indirects awarded 68.7%, above last month's 65.3%, and above the recent average of 65.5%. And with Directs taking 15.7%, roughly unchanged from last month and one of the lowest prints of 2024, Dealers were left with 15.7%, just below the recent average of 15.9%.

The market reaction was curious: while yields promptly rose near session highs, as one would expect after a tailing auction...

... it was the jump in rate cut odds after the auction that was the most notable market reaction, even if it is unlikely to be realized unless somehow next week's retail sales print comes 6-sigma below the estimate and indicates the recession has already begun.

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