• 10 year auction has impressive demand, but at higher rates.
  • 3.45 Bid To Cover, but 3.735 % high yield with 70.94% of the bids at high yield
  • MBS and Treasuries both slightly better on the announcement
  • 4.5's are now down only 2 ticks on the day at 100-29 and 10yr yields are back down to 3.72+ from 3.74+

Here is a breakdown of the auction results:

9-YR 11-MO NOTES

YIELDS
    High                       3.735 pct
    Median                   3.700 pct
    Low                        3.636 pct

PRICE/ACCEPTANCES

    Price                     99.090493
    Accepted at high      70.94 pct
    Bid-to-cover ratio            3.45

AMOUNTS TENDERED AND ACCEPTED (dollars)

    Total accepted                             21,000,013,800
    Total public bids tendered          72,466,493,000
    Competitive bids accepted          20,829,510,800
    Noncompetitive bids accepted           70,503,000
    Fed add-ons                                      248,452,700
   
    Primary Dealer Tendered           49,661,000,000
    Primary Dealer Accepted              9,857,410,000
    Primary Dealer Hit Rate          19.8% of their bid
    Primary Dealer Total Award   46.9% of issuance

    Direct Bidder Tendered                8,401,000,000
    Direct Bidder Accepted                 3,653,110,800
    Direct Bidder Hit Rate             43.5% of their bid  
    Direct Bidder Total Award      17.4% of issuance  

    Indirect Bidder Tendered           14,233,990,000
    Indirect Bidder Accepted              7,318,990,000
    Indirect Bidder Hit Rate          51.4% of their bid
    Indirect Bidder Total Award  34.9% of issuance

Looking at the resistance at 3.72, that's the first challenge for the bond market if it would like to improve this afternoon.  Once that breaks (if it breaks), the rest of the day is very likely "there or better," but until then, stay tuned.  For the moment anyway, risks of reprice for the worse are greatly decreased, and probably favor a reprice for the better to a small extent, though I'm not comfortable assuming a rally will take place with these auction results until we've seen some more trading.