Stellar 7Y Auction Sends Treasury Yields To Session Lows

After two solid, record-sized coupon auctions, moments ago the Treasury concluded the week’s scheduled issuance when it sold $43 billion in 7Y notes (which unlike the 2s and 5s previously, was not a record-large auction and has a ways to go to catch up to the $61BN 7Y auctions during the depths of the post-covid crisis).

The auction priced at a high yield of 4.185%, which was notably below last month’s4.327% and also stopped through the 4.193% When Issued by 0.8bps, the second consecutive stopping auction following three “tails.”

The bid to cover of 2.614 was above last month’s 2.577 and was the highest since October, naturally well above the six-auction average of 2.54.

The internals were also impressive, with Indirects awarded 69.7% which was also the highest since last October. And with Directs taking down 17.4%, up from 14.8% last month, Dealers were left holding on to 12.9%, the lowest since – you guessed it – October 23.

Overall, this was an impressive, “A+” rated auction, as the market reaction agreed by sending Treasury yields to session lows…

… and where every aspect of the sale came “above and beyond” and did not even hint at a possibility of demand drop at a time when US debt is growing by $1 trillion every 100 days. Then again, it’s only a matter of time before that does happen so for all those who bought paper today, enjoy it while you can.