US TSYS/SUPPLY: 10Y Auction Preview: Awkward Timing

In one of the more awkwardly-timed 10Y Note refunding auctions in recent times, Treasury comes to market at 1300ET today to sell $42B (CUSIP: 91282CLW9). It comes against the backdrop of US election day, and two days before the Fed meeting. 

• Since the last auction (4.066% high yield) on Oct 9, yields have moved up significantly, with the current when-issued yield currently standing around 30bp higher at 4.35% which would make it the highest at a 10Y auction since June.
• The move has been exacerbated by both speculation over the election result (a "Republican Sweep" is the modal implied outcome, which is considered Treasury-negative), and strong data pushing up both real yields and breakevens as Fed cuts get priced out. It's hard not to see participation in today's auction as something of a play on the electoral outcome. Meanwhile today's stronger-than-expected Services ISM has been a reminder of recent good data, just ahead of the Fed's expected 25bp cut Thursday. Already, Monday's 3Y auction proved weak ahead of such significant event risk.
• There have been two tails and 3 trade-throughsfor 10s  in the last 5 auctions; average bid/cover of 2.54x, with primary dealer uptake 13.0%, indirects taking 72.4% and directs 14.6%.