Bonds Crash Most Since Liberation Day After Catastrophic 5Y Auction; 2nd Biggest Tail On Record

Coming into today’s 5Y auction, the bond market was collapsing, with yields across the curve soaring but especially the 5Y exploding a crazy 15bps heading into today’s auction (of 5 Year treasuries), a massive concession which we thought would lead to “lots of demand” for today’s offering. 

*TREASURY 5-YEAR YIELD RISES 15 BASIS POINTS ON DAY TO 4.99%

At least there will be lots of demand for paper in today’s 5Y auction

— zerohedge (@zerohedge) September 23, 2026

Boy, were we wrong: moments ago the Treasury published results from today’s auction and there were absolutely disastrous.

The sale of $70 billion priced at the first 5%+ yield since 2007, 5.033% to be specific (which means the first 5% cash coupon for today’s buyers in 19 years), up from 4.391%. But the kicker is that the When Issued traded at 5.001%, meaning the auction tailed by a massive 3.1bps, which is the 2nd highest tail on record.

The bid to cover was ugly: down to 2.212 from 2.371, and the lowest since December 2018. 

The internals were even worse: Indirects plunged to 54.31% from 61.51%, the lowest since the depths of covid, in March 2020. And withj Directs inexplicably jumping to 29.92%, the highest since December ’25, Dealers were left holding 15.8% of the auction, the most since May 2024.

Overall this was a horrific auction, where demand simply was not there contrary to what the When Issued indicated, and the results sparked a fresh rout acorss the curve, with the 10Y last trading just shy of 5.13% in what is shaping up as the worst day for the bond market since Liberation Day.