After two months of declines, in February the high yield on the 2Y auction exploded higher, and in the Treasury's sale of $42 billion in 2Y paper completed moments ago, the US had to pay interest of 4.673%, up from 4.152%, and tailing the When Issued 4.670% by 0.3bps. The yield was also the highest going back to July 2007.

Amusingly, at the exact same time, today's 52-Week Bill auction also closed. Its yield: 4.795%, so yes - the curve is now inverted at that 1Y-2Y kink. 

The bid to cover on today's 2Y auction was 2.613, a sharp drop from last month's 2.944 which was the highest since the Covid lockdown days of May 2020. Today's BtC was also below the recent, six-auction average of 2.65%.

The internals were also rather forgettable, with Indirects awarded 62.04%, the lowest since November, but above the recent average, due to the ugly September and October '22 auctions. And with Directs awarded 23.0%, that left dealers with just 14.97%, which while not a record low for the series wasn't that far off.

Bottom line: this was a mediocre, tailing and overall forgettable auction, if hardly terrible and a reflection of the market's overall mood today which has seen risk hammered across the board, and yields across the curve jumping to the highest since November.