After two surprisingly strong 2 and 5-Year auctions, the bond market tantrumed on Thursday when today's sale of $32 billion in 7Y notes was met with absolutely dismal demand.

Printing at a high yield of 1.489%, this was the lowest 7Y auction yield since October 2016, but more importantly tailed the When Issued 1.468% by 2.1bps, the widest tail since 2016.

The demand was, in a word, deplorable: the bid to cover slumped from an already low 2.274 to just 2.159, the lowest in over ten years, going back to February 2009, and far below the 2.44 six auction average. The internals were ugly as well, with Indirects barely taking down a majority of the auction, or 50.2%, down from 59.4% in July, and the lowest since December 2015. And with Directs allotted 16.1%, or also below the 19.9% recent average, it left Dealers holding 33.8%, the highest since December 2015.

Overall, a very ugly auction, and one which has sent the 10Y yield to session highs, and the 30Y back over 2.0% (and now far above the matched maturity Italian bond).