9 November 2023
Today’s 30-year Treasury auction was an absolute debacle, with the worst tail on record since 2016 and the lowest bid-to-cover ratio since December 2021. Indirect (foreign) participation plummeted, leaving dealers to absorb nearly a quarter of the offering, signaling distress and hinting at imminent Federal Reserve intervention. This fiasco sent shockwaves across financial markets, causing Treasury yields to soar, stocks to plunge, and the dollar to surge, all amidst crumbling Treasury liquidity. The Federal Reserve faces a significant challenge ahead.