If anyone was hoping that today's 20Y auction would be even remotely successful, they can not put those to bed: the just concluded sale of $16BN in 20Y paper was a disaster.

Pricing at a high yield of 4.680%, the auction tailed the When Issued 4.650% by 3.0bps. Not only was this the third tail in a row, it was the 2nd biggest tail on record.

The bid to cover was even worse: sliding from 2.59 to 2.34, the btc was the lowest going back all the way to August 2022.

The internals were perhaps the only silver lining to the auction: indirects took down  69.5%, up from 67.9%, below the six auction average of 71.6%. But while Indirect demand was ok, the Direct award plunged to just 7.9% from 17.6%, the lowest on record. This mean that Dealers had to step in big time and so they did, taking down 22.6%, up from 14.5% and the highest since May 2021.

In light of just how ugly the auction was, it is probably not a surprise that yields spiked after the result, with the 10Y rising 2bps from 4.39 to 4.41, and hammered risk assets.

Commenting on the auction, UBS said that it looks like the prior well-demanded 10y and 30y auctions were just fast money profit-taking on shorts, and that "real money hasn't started to buy bonds." Well, the real money better step in soon or it will get ugly fast.