There was a nearly 4 basis point tail on the 30-year sale. That's certainly going to add to the term premium argument.

It's highly unusual for a bond auction to miss this badly and it argues for a return to the highs in yields.

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Yesterday's 10-year auction also tailed.

I can't stress enough how rare it is for a bond auction to tail this badly. It speaks to some kind of real change in underlying Treasury demand, or at least some hesitation that hasn't been there in decades.

In the past week, there's been some cautious optimism that long-end rates were peaking but I'm much less confident that's the case now. Expect 30s to go back and test 5% again.

That's a big tailwind for the dollar as it makes differentials more attractive but it might ultimately be a double-edged sword. The term premium argument certainly leads back to deficits as a potential culprit and if Congress decides to embrace true austerity then grown is going to become a problem. Moreover, if the US can't borrow, then who can?