Stellar 7Y Auction Sees Highest Stop Through Since 2022, Record High Directs

Yesterday's weak 5-year Treasury auction had the market apprehensive about today's 7-year note sale. However, the 7-year auction was surprisingly strong. The Treasury sold $44 billion in 7-year notes, with the high yield at 4.092%. This yield was lower than expected, stopping 2.6 basis points through the "When Issued" rate. This indicates strong demand for the middle portion of the yield curve. The bid-to-cover ratio significantly increased from 2.531 to 2.787, reaching its highest level since August 2012. While indirect bidders took a smaller share than last month, direct bidders purchased a record 33.7%. Dealers were allocated the lowest amount on record, just 4.1%. This auction is considered one of the strongest on record. Following the announcement, Treasury yields continued to fall.