We Said 5.30% Was the Wrong Tenor. The October Ten-Year Cleared at Exactly 5.300%.
The Treasury sold $42 billion of ten-year notes at 18:00 UTC at a high yield of 5.020%, one basis point above the 5.010% when-issued level — our own subtraction, so the auction tailed and did not stop through.
Bid-to-cover 2.46, indirect bidders 61.2%, directs 29.0%, dealers 9.8%. First, a retraction: at today's pre-US slot we published a hypothesis that a calendar listing the previous ten-year auction at 5.30% had the thirty-year's yield in the ten-year's row. The 7 October ten-year cleared at exactly 5.300% on a cover of 2.77, confirmed by two readers, and the same calendar row gave the cover as 2.8. The vendor was right on both fields and we did not use the one that would have told us. With the same-tenor baseline finally in hand: the stop fell 28.0 basis points, the cover fell 0.31, and indirect bidders fell 19.1 percentage points on an offering $3 billion larger — the Treasury paid materially less and got materially worse demand, with the take rotating onshore to directs at 29.0% against a 15.9% average. Four publishers called the same numbers "in line", "a little soft" with a D plus grade, "weaker demand" and "below average demand", within six minutes of each other, and one of them has the average stop-through sitting in the tail field, which is what produced its headline. The two published averages for the cover are 2.54 over a named ten-auction window and 2.60 with no window at all, a factor of 1.75 on how light the auction looks. And dollar-yen closed above its 200-day for the fourth time since mid-September, at 158.77 against a band of 158.60 to 158.70 that still, after twelve slots, carries no date.