I suppose it’s not surprising that Thursday’s long bond sale went poorly.

After all, Wednesday’s 10-year auction was rough, and you’re encouraged to note that the tail on that sale was a factor in undercutting risk sentiment on Wall Street midweek.

The tailing 10-year supply event didn’t bode well for the long bond refunding, which was already staring at an impossible seasonal: 30-year auctions are weak in August. Period.

Sure enough, the auction tailed, and by the same three basis points as the benchmark offering the day before. Non-dealers were 80.8% of the sale, the lowest since November, which is to say the lowest since supply reception was top of mind for markets. Dealers’ were left 19.2%, a mile above the norm.

Why does this matter? Well, it probably doesn’t to be completely honest with you. Coupon increases are over for now and the QT taper mitigated the borrowing estimate which, you’re reminded, was cut last week consistent with dealer estimates.

But as I noted on Wednesday while editorializing around the 10-year flop, the scope of last week’s US Treasury rally and the associated rates fireworks (i.e., vol) were guaranteed to impact this week’s supply events. Yes, yields retraced higher from the Monday panic lows, but the optics associated with a rally the size of that seen last week virtually demanded a concession — even if recession fears are warranted and even considering an imminent Fed cutting cycle.

Beyond that, I pretty much had to mention Thursday’s sale given the role the 10-year tail played in spoiling Wednesday’s comeback party.

The poor reception Thursday was a break with 2024 precent. Auction volatility’s receded this year and long bond supply has been generally well received.