US sells USD 42bln of 10-year notes; Tail 0.1bps

Tail: 0.1bps (prev. -0.6bps, six-auction average 0.3bps) High Yield: 4.683% (prev. 4.580%, six-auction average 4.377%): WI 4.682% B/C: 2.53x (prev. 2.59x, six-auction average 2.47x) Dealer: 8.6% (prev. 7.8%, six-auction average 11.0%) Direct: 14.7% (prev. 10.7%, six-auction average 17.7%) Indirect: 76.7% (prev. 81.5%, six-auction average 71.3%)

A near-on-the-screws 10-year auction: a 0.1bp tail against the WI is statistically clean and sits slightly better than the recent six-auction average, though it marks a step back from the prior auction's 0.6bp stop-through. The allocation mix tells the more interesting story: indirects at 76.7% came in well above the six-auction norm but off the prior auction's exceptionally strong showing, while directs printed below average, leaving primary dealers to take down 8.6%, still under their typical share. That pattern, strong foreign sponsorship with a modest domestic pullback, has historically been read as constructive for the belly of the curve, since indirect demand is treated as the stickier, lower-beta flow. The 2.53x cover is solidly above the recent average, and the high yield clearing through the WI by the slimmest of margins signals end-user demand arriving at the last print rather than dealers being left with the tail. What carries forward is whether the 30-year leg of the refunding confirms the foreign bid and how the belly trades into the close, since well-sponsored 10-year supply has tended to anchor the curve only when the subsequent long-bond takedown corroborates it.