Treasury got the message, apparently. The term premium spoke, and at least someone was listening.

The November refunding announcement, arguably the most important market event in a week full of them, saw coupon increases that were smaller than at least some observers expected.

The curve bull-flattened in response to a more modest increase in auction sizes for 10- and 30-year Treasurys, which were raised by $2 billion and $1 billion, respectively. Next week’s refunding will total $112 billion, below the $114 billion dealers expected. It was, of course, the second consecutive quarterly refunding increase. Treasury said coupon auction sizes will likely need to be boosted on more time.

Twos and fives will increase by $3 billion per month, threes by $2 billion and the seven-year by $1 billion. There was no change to the 20-year new issue and reopening auction size.

The smaller-than-expected increases to long-end sales may provide at least some respite, particularly coming on the heels of Monday’s financing estimate, which was likewise lower than anticipated.

Supply concerns were behind the sharp repricing in the term premium since August which was, in turn, the driver of the bond selloff, as illustrated above.

Recent auction tails suggest the shifting buyer base for US debt will be inclined to extract an appropriate amount of compensation for the risk incurred, particularly on days when the pre-sale price action doesn’t constitute a meaningful concession.

There was rampant speculation that Janet Yellen might tilt issuance even more towards bills given voracious demand from money market funds and, relatedly, RRP balances still in excess of $1 trillion. Treasury was a bit vague in that regard. “Given current fiscal forecasts, Treasury expects to maintain bill auction sizes at current levels into late-November — this will help to ensure sufficient liquidity to meet our elevated one-week cash needs around the end of this month,” the statement said. “By early-December, Treasury anticipates implementing modest reductions to short-dated bill auction sizes that will likely then be maintained through mid- to late-January.”

Recall that bills as a percentage of outstanding debt are now near the upper-end of the TBAC-recommended range, but dealers are apparently fine with bill share “temporarily” (as the last refunding minutes put it) exceeding 20%. The new TBAC minutes reiterated the point. “The Committee expressed continued comfort with the bill share of total marketable debt outstanding remaining temporarily above its recommended range given continued robust demand for bills and Treasury’s regular and predictable approach,” the account said.

“On net, our takeaway from the new information was that the reintroduction of term premium into the long-end of the curve was enough to give Yellen pause in being too aggressive with long-end issuance increases,” BMO’s Ben Jeffery said Wednesday, adding that “the risk is tilted toward a more measured approach going forward.”

One amusing passage from the minutes found officials reviewing a presentation about the acute long-end selloff. There’s “an upward trend in several estimates for the long run neutral rate,” the presenter noted, adding that there are “a range of potential explanations for the increase in term premia, including various supply and demand dynamics.” The groundbreaking conclusion: “There is a high degree of uncertainty regarding the outlook for yields going forward.”