10 yr auction was bad

After a weak 3 yr note auction seen yesterday, the 10 yr auction today was bad. It tailed by 3 bps, rather big, to yield 4.56%. Also, the bid to cover of 2.34 was well below the one year average of 2.49. That’s the lowest since December 2022. And lastly in confirming the poor result, dealers were left with 24% of the auction which is the most since November 2022.

Bottom line, yields are at the highs of the day in response to this bad auction with the 10 yr yield in particular at the highest level since mid November. I still expect the 10 yr yield to retest the 5% level at some point this year.