20Y Bond Auction Preview: Breaking A Bad Streak?

Today's $13B 20Y bond auction (1300ET/1800UK) comes against a backdrop of weak sales of late, including 4 consecutive tails: 3Y, 10Y, 30Y last week; and 7Y at end-Sept.

• The 30Y auction was the most recent in that series and suggested limited appetite for duration amid rising anticipated Treasury supply, with a 3.5bp tail and soft periphery stats (the 10Y's 1.6bp tail also wasn't a good sign).
• September's 20Y auction saw an on-the-screws sale with high yield 4.592%. Today's is set to bring the highest-yet yield on the reintroduced 20Y at auction, with prevailing market rates currently printing just above 5%. (Note Treasury reintroduced the 20Y maturity in 2020, after a 34-year hiatus).
• Real (TIPS implied) as well as nominal 30Y yields are at post-2007-08 highs amid an upward repricing in term premia largely on Fed "higher for longer" speculation. That would appear to be a sufficient concession to avoid a large tail, but that's what makes today's sale such an interesting test.
• Of the past 5 auctions, 3 have traded through; 1 tailed (Aug, by 1.2bp), with September's on-the-screws. The 5 auction average bid-cover is 2.68x, with primary dealer takeup averaging 9.9% and indirects 69.5%.