Ugly, Tailing 20Y Auction Lifts Yields From Session Lows

In the week's lone coupon auction, moments ago the US sold $13BN in 20Y paper in the form of 19Y, 11M reopening of cusip UF3, which ugly at best.

The high yield of 4.686% was the highest since April, above November's 4.680% and tailed the When Issued 4.671% by 1.5bps, the 4th tail in a row.

The bid to cover was 2.50, up from 2.34 but the second lowest since March and thus clearly below the six auction average of 2.57%.

The internals were also disappointing: Indirects took down 62.0%, down from 69.5% and the lowest since February. And with Directs awarded 20.1%, or the most since January, Dealers were left holding 17.9% of the auction, below last month's 22.6% but above the six auction average of 13.3%.

The subpar auction results lifted the 10Y yield by 1 basis point to 4.38% from a session low of 4.37%, having previously hit a 3 week high of 4.44%.