Treasury Yields Tank, $QQQ $SPY Moon After Stellar 20Y Auction

This week, the Treasury sold 20Y bonds in a solid auction with decent bidside demand. The pricing at a high yield of 4.78% was not only the first time since March that the yield in the 20Y auction has fallen sequentially, but it was also well below last month's 5.245%.

The Bid to Cover was solid if hardly remarkable, printing at 2.58. The internals were more notable: Indirects were awarded 74.0%, the highest since June, and well above the recent average of 70.1%. And with Directs awarded 16.5%, just above last month's 15.2% if below the recent average of 19.75%, Dealers were left holding 9.5%, below the six-auction average of 10.2%, and in line with single-digit allotments in 4 of the past 6 auctions.

Stocks jumped to session highs, with the NYSE TICK indicators surging as high as 1700, the highest since CPI Tuesday's 1989 TICK print, which in turn was the highest since February.

TNX - 10 Year Yield

/NQ - NASDAQ Composite

What This Means for Investors

The strong demand for the 20Y bonds suggests that investors are still willing to buy long-term Treasury debt despite the recent rise in yields. This is likely due in part to the fact that inflation is still a concern, and investors are looking for safe haven assets. The auction results also suggest that the Federal Reserve is not likely to raise interest rates as aggressively as some had expected. This is good news for stocks, which have been under pressure in recent weeks due to concerns about rising rates.

What to Watch

Investors will be watching for signs of further inflation in the months ahead. They will also be paying attention to the Federal Reserve's next meeting in December, where the Fed is expected to announce a decision on interest rates.

Overall, the Treasury's 20Y bond auction was a positive development for the markets. It suggests that investors are still willing to buy long-term Treasury debt, and that the Federal Reserve is not likely to raise interest rates as aggressively as some had expected. THIS IS NOT FINANCIAL ADVICE Join a community of like minded traders: DISCORD: https://discord.gg/optionstrading