Solid 10Y Auction Despite Modest Tail As Shorts Cover Into 1pm Deadline Similar to yesterday's 3Y TSY, the 10Y note was trading special in repo overnight ahead of today's $36BN auction. However, unlike yesterday's 3Y auction, which stopped through generously, today's 10Y auction did not do as expected (perhaps the fact that yields dropped sharply seconds after our tweet... ... expecting a big stop through did not help). Expect another stellar, stop through 10Y auction. Why? Shorts are scrambling, with ON repo rate down to -0.15% pic.twitter.com/rpndTYyYFz — zerohedge (@zerohedge) https://twitter.com/zerohedge/status/1468640270522720265?ref_src=twsrc%5Etfw!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); Instead, and contrary to expectations, today's 10Y auction actually tailed the 1.514% When Issued (which however was 1.52% just moments earlier), printing at 1.518%, a 0.4bps tail, and some 7.5bps higher than the November high yield of 1.444%. The bid to cover rose from November's 2.35 to 2.43, if slightly below the 2.52 six auction average. The internals were also mediocre with Indirects taking down 68.8%, down from 71.0% last month, and with Directs taking down 17.8%, or well above the recent average, Dealers were left holding 13.4% or about 1% below the six-auction avg of 14.4% Overall, a solid auction, which saw a big concession going into today's 1pm deadline, and despite the modest tail, the yield is now about 1basis point below the auction high yield. Tyler Durden Wed, 12/08/2021 - 13:14