After yesterday's very ugly, massively tailing 10Y auction set off substantial intraday sell-off across bonds, many were concerned that today's 30Y refunding could be just as bad if not worse, and accelerate the steepening of the yield curve in the US and abroad. That, however, did not happen because moments ago the US Treasury sold $15 billion in ultra-long dated paper at a yield of 3.005%, stopping through the When Issued 3.007% by 0.2bps, even though just like yesterday there was absolutely no pressure in the repo market ahead of the auction, suggesting little potential for a short squeeze. Of note: 3 of the last 4 30Y refundings have all tailed.

The internals were good enough, with the Bid to Cover of 2.25 slightly lower than last month's 2.32 and just under the 6 month average of 2.30. More importantly, indirects continue to show interest, and took down a near record 66.2% of today's auction, well above the 6MMA of 61.6%, while Dealers were left with 28.9%, in line with recent averages. Directs were left holding 4.9% of the final takedown.

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However, in another amusing kneejerk reaction by the algos, despite the initial tightening after the print, the desire to continue the sell-off was so big that the yield quickly popped wider despite what was ultimately solid demand, especially by foreign buyers.

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