Investors showed up at Wednesday's 10-year Treasury note auction to gobble up $39 billion worth of notes at their highest yield in more than two decades.

Demand was strong. The bid/cover ratio was 2.77, meaning $2.77 in bids were received for every $1 of debt on offer, which is stronger than the average ratio of 2.55 for recent 10-year Treasury auctions. Dealers, who typically buy up the leftover supply at auctions, have recently taken an average of 8.5%, but took only 2.5% on Wednesday -- the lowest amount in a 10-year auction since the Financial Crisis, according to BMO Capital Market strategist Vail Hartman.

The 10-year Treasury notes were sold at a yield of 5.30%, a payout that will be given to investors for the next decade semi-annually. This yield is 0.018 percentage points below the pre-bidding deadline level, which is another sign of strong demand.

A brutal meltdown of long-term government bonds had set the stage for the auction. The 10-year yield climbed as high as 5.368% in the morning, a level not seen since 2002. Shortly after the auction, the 10-year yield fell as low as 5.273%, before rebounding slightly.

Foreign investors appeared to be active participants at Wednesday's auction. Indirect bidders, a group that includes foreign investors, were awarded 80.3% of the debt on offer, versus an average of 74.7%, per Hartman. Separately, official Treasury data has shown growing participation by non-U.S. buyers at auctions.

The 3-year auction on Tuesday was also strong. Attention now turns to Thursday's auction, when $22 billion worth of 30-year bonds are scheduled to be sold.

Wall Street veterans, including Gavekal Research co-founder Anatole Kaletsky and Founder of Bianco Research, Jim Bianco, have recently turned optimistic on long bonds after years of shunning them.

It appears that they are not alone.