The Treasury Department just auctioned $28 billion 7 year notes. This is the second consecutive auction at record size, July's being the first. In total this week's 2yr/5yr/7r auctions raised $90 billion for the Treasury.
The bid to cover ratio, a measure of auction demand, was 2.74%. The second highest demand since the issue reopened in February. Strong Demand!
46.29% of the bids were awarded at the high yield of 3.092%. Much lower than the 92% that was awarded at the high yield in July. When the auction stopped out at 1pm the "When Issued" 7 year note was trading at 3.135%...strong demand pushed yields lower at the auction.
Indirect bidders took 61.2% of the issuance after being awarded 62.6% in July and 67.2% in June.
Once again the market's ongoing demand for risk free investments has been illustrated...regardless of any psychological angst that might be conjured up from the phrase "record size".
Immediately following the auction, the FN 4.5 shot to the topside of the recent range, then retraced a few ticks, and is bouncing between 100-10 and 100-07.
Will update accordingly...
MBS Market Alerts
