Heading into today's supersized 10Y auction, BMO's rates strategist lamented the stubborn range which has confined US rates since mid-March - at +/-10bps of 61bps - which however indicates that even the hefty dose of larger than anticipated long-end auctions is insufficient to redefine the trading parameters. This, they said, bodes well for today's supply and the combination of attractive hedged returns for Japanese investors in US Treasuries, together with the record poor April consumer price update should support the underwriting process.

BMO was right, because one day after a stellar supersized 3Y auction, refunding week continued with today's sale of a record large 10Y Treasury, which at $32 billion was the largest offering on record.

Appropriately, the yield on this record big auction was the lowest on record, and at 0.70%, it stopped through 1.2bps the 0.712% When Issued, and well below April's prior record low yield of 0.775%.

The other metrics were remarkable as well, with the Bid to Cover jumping to 2.68, the highest since June 2016, while the internals were tremendous, with the Indirects taking down 66.1%, the highest since April 2019, and with Directs taking 13.3%, in line with last month, Dealers were left with 20.5%.