In a quiet day for stocks, which are now trading near session lows, which in turn is prompting a bid for safety, the Treasury complex was already trading at the best levels of the day ahead of today's Treasury auction. Then just after 1pm, the stellar results from today's 20Y auction (technically a 19 Year 11-month reopening of cusip UV8), confirmed the solid demand for US paper. 

Today's sale of $13BN in 20Y paper was solid from top to bottom. The auction priced at a high yield of 4.927%, down from 5.122% last month; it also stopped through the 4.937% When Issued by 0.1bps. This means we have had 4 auctions without a tailing 20Y auction yet.

The bid to cover was likewise impressive, rising to 2.75 from 2.55, the highest since March and above the recent average of 2.648.

The internals were even better: indirects were awarded 71.6%, a big jump from 67.7% last month and the highest since July 2024. And with Directs awarded 19.9% (below the six-auction average of 24.3%), Dealers were left holding just 8.5%, one of the lowest on record.

Overall, this was a very strong auction, which was notable since there was virtually no concessions in today's strong secondary market. It also indicated that there are few jitters that Kevin Warsh may drop a hawkish surprise during tomorrow's FOMC meeting.