We knew that going into this week's holiday-shortened week liquidity would be challenging, but nobody expected it to be this bad: moments ago the Treasury sold 20Y bonds in a solid auction with decent bidside demand, and while this was a far cry from the recent "catastrophic" 30Y auction, the market reaction was as if the Fed has resumed QE, with yields tumbling across the board and stocks suddenly surging to session highs amid a burst of program buying. More on that in a second.

First, the details of the auction: pricing at a high yield of 4.78%, this was not only the first time since March that the yield in the 20Y auction has fallen sequentially, but it was also well below last month's 5.245%. It also stopped through the When Issued 4.79% by 0.1 basis point, making this the third consecutive stop through in a row.

The Bid to Cover was solid if hardly remarkable: printing at 2.58 it was in line with last month's 2.59 if below the recent average of 2.67%.

The internals were more notable: Indirects were awarded 74.0%, the highest since June, and well above the recent average of 70.1%. And with Directs awarded 16.5%, just above last month's 15.2% if below the recent average of 19.75%, Dealers were left holding 9.5%, below the six-auction average of 10.2%, and in line with single-digit allotments in 4 of the past 6 auctions.

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The auction result, which impacted the historically most illiquid tenor on the curve, was immediately taken by the market as a sound endorsement of the Biden admin's "spending like a drunken sailor" fiscal policies and yields immediately plunged to session lows, down almost 5bps in seconds...

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... while stocks jumped to session highs, with the NYSE TICK indicators surging as high as 1700, the highest since CPI Tuesday's 1989 TICK print, which in turn was the highest since February.

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