Terrible 20Y Auction Prices With Huge Tail, Lowest Foreign Demand On Record

Earlier today during his grilling in Congress, Treasury Secretary Scott Bessent was asked to explain the recent spike in yields, to which his response was to blame oil, and point out that last week's 10Y and 30Y auctions were both stellar. Which they were... but only because they took place on days when yields soared earlier itn eh day, giving buyers in the auction solid concessions and thus a desire to bid aggressively for the paper, which they did.

*BESSENT: JUST HAD 2 OF MOST SUCCESSFUL DEBT AUCTIONS IN 20 YRS

right, thanks to the huge concessions on VaR shock days

— zerohedge (@zerohedge) September 15, 2026

There was no such concession today when yields had been trading around 5% for much of the day. And without a concession, demand for today's 20Y Treasury auction was much more indicative of the true state of the primary bond market.

And that is, to Bessent's disappointment, very dismal!

The auction priced at a high yield of 5.420%, the highest on record since the 20Y auction was introduced in May of 2020, and up from 5.204% in August. Worse, it tailed the When Issued 5.400%, a 2.0bps tail, which was the biggest since 2024!

The bid to cover was below average: at 2.57 it was just above last month's 2.53, but below the recent average of 2.65.

The internals were far worse: Indirects plunged from 62.9% to just 52.5%, far below the recent average of 68.0%, and in fact, the lowest on record!

And with Directs soaring to 30.7% from 24.6%, which was the highest on record by a wide margin, left Dealers holding 16.9%, not quite the highest on record but close.

So what's the verdict? Well, hot on the heels of two stellar auctions last week, which however were only stellar because the broader market was plunging, today's 20Y was as close to a failed auction as Bessent would like to get at a time when QE is not there to mop up any treasury mess that the surge in inflation can cause. Which reminds us: now that the buyback bluff has failed, what will be the next crisis that sets up the US for the next version of QE (we lost track which one that will be) and maybe just fast forward to the first Yield Curve Control since World War II. And why not: pretty much anyone who is paying attention will tell you that the world now finds itself in another world war...