The mystery Direct Bidder collapse observed in coupon auctions in November is now a distant memory.

Moments ago, the US Treasury sold $38BN in the 3Y paper, which priced at a yield of 2.748%, tailing the When Issued 2.745% by 0.3bps. The yield was the lowest since July, the result of the recent repricing by the market of the Fed's dovish reversal. This was the 9th consecutive 3Y auction that tailed and 10th of the past 11.

The Bid to Cover saw a modest increase from 2.54 in November to 2.59, just under the 6 month average of 2.63.

But as observed in other recent auction, the auction was most notable for the rebound in Direct Bidders, which rose from 3.0% last month to 12.5%, far above the recent auction average of 8.99%, and the highest since July 16. Indirects came in line at 50.5%, leaving 37.0% for Dealers, the lowest dealer takedown since January.

Overall a mediocre, tailing auction, which however was solid thanks to the bounce back in Direct bidders, allowing it to price at the lowest yield in half a year.

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