After yesterday's dismal 3Y action which was nothing short of a disaster across virtually every metric, moments ago the US Treasury sold $24BN in the 9-Year-10-Month reopening of CUSIP 5M8, which was about as close to stellar as one can get after yesterday's fiasco.

The Auction priced at a high yield 2.728%, stopping 0.8bps through the When Issued of 2.736%, and the lowest yield since January 2018, sharply lower than last month's 2.915%. The Bid to Cover meanwhile jumped from 2.35 to 2.51, in line with the historical range.

The internals were also strong, with Indirects taking down 56.9% of the auction, below the 65.3% 6 auction average, but that was largely due to the surge in Directs which doubled from 10.8% last month to 20.8%, the highest since May 2015. This left Dealers holding 22.3%, far below the 26.0 six auction average, and the lowest since January 2018.

Overall, a surprisingly strong auction, one which the bond market urgently needed especially after yesterday's unexpectedly poor sale of 3Y paper.

The most important takeaway, however, is that even with US Treasurys generating the lowest FX-hedged yields in the world, there is still substantial foreign demand for US paper.