As the keen among you have surely surmised by now, the optically awful 30-year sale which undercut market sentiment ahead of Jerome Powell’s IMF address this week was amenable to a “more than meets the eye” interpretation.

The 5bps tail and huge dealer award ostensibly pointed to lingering sponsorship concerns. As I put in the minutes following the sale, the poor result was a testament to the notion that it’s going to take more than a polite nod from Treasury to the term premium repricing and incrementally softer macro data to pacify the shifting buyer base for US debt.

Said differently, the poor reception was an unwelcome reminder that unless and until the litany of concerns cited for the August-October bond selloff are addressed, the US long-end will remain a volatile beast.

But there was probably more to it than that. ICBC had some problems on Thursday. As Bloomberg detailed in one of several pieces covering a high-profile cyber attack, the bank’s US unit was “unable to clear swathes of US Treasury trades after entities responsible for settling the transactions swiftly disconnected from the stricken systems forc[ing] ICBC to send the required settlement details to those parties by a messenger carrying a thumb drive as the state-owned lender raced to limit the damage.”

Apparently, all the homing pigeons were booked up or otherwise engaged.

ICBC’s issues may well have impacted the 30-year sale. Here, according to Nomura’s Charlie McElligott, is how:

To the question about this sudden “lack of demand” issue: Was it simply [that] these duration-heavy bonds look much less attractive to investors after the recent explosive rally because they need to be more generously compensated for taking the risk of owning these bonds into the ongoing structural supply dynamics and with the inflation beast still not-yet buried?

I think qualitatively that could have certainly been part of it, although one dynamic that makes [Thursday’s] ugly auction results murky was the ICBC cyber attack described across various financial media, which gunked up anybody who clears UST trades through them, and made it so that many dealers were then likely unable to trade with those clients until resolved, on account of unsettled trades which weren’t able to be matched.

Further, it is said that the bank offers legging services, and that feature was inaccessible during the cyberattack, so this was a real issue for entities who run auction strategies, e.g. legging into US-30, WN-30, 10-30 etc. Some feedback from rates sales was that they saw abnormally heavy flows in flies because customers couldn’t user their leggers.

Point being, this might be a case of “more than meets the eye” to this “ugly auction evidencing low demand for duration” story and I think why, as more and more people begin to understand these circumstances which clouded the knee-jerk read on the auction, we’re seeing duration firm-up .