10 yr note auction mixed to the soft side

The 10 yr note auction was a mixed bag. The auction tailed about 1 bp with a yield of 4.166% and vs the when issued of 4.157% and dealers were left with 17% of the auction, slightly above the one yr average of 15% but the bid to cover of 2.51 was just above the 12 month average of 2.48, though a 4 month low.

Bottom line, after the CPI was fully digested, yields have been slowly rising all day and are now at the highs of the day post mediocre auction. Also post CPI, inflation breakevens across the yield curve are up about 3 bps. I still think 10 yr yields will retest 5% at some point latter this year.