After a poorly received, tailing 3-Year auction, moments ago the Treasury dumped the second load of supply for the day when it sold $23 billion in the 10Y paper. The auction, not surprisingly, could have been stronger.

Stopping out at a high yield of 3.225%, the highest since April 2011, it tailed the When Issued 3.222% by 0.3 bps, the first tail since May 2018.

The internals were even uglier: the Bid to Cover slumped from 2.58 in September to just 2.39, the lowest since February, and far below the 6 auction average of 2.55. And while Indirect bidders stepped up, taking down 64.5% of the auction, the highest since July, and above the average of 60.4, the Direct bid tumbled from 13.4% to 5.4%, the lowest since February, and less than half the 11.4% average. As a result, dealers were left with 30.1%, the most going back all the way to April.

(Click on image to enlarge)

Overall, a mediocre auction, if again like the 3 Year, not the disaster that some were expecting, and evidence that at these higher yields, buyers will still be happy to fund Uncle Sam's soaring deficit.