If Tuesday's 2Year auction surprised to the upside thanks to trading rather special in repo, and yesterday's 5Y auction was poorly received with no repo tightness, then today's 7Y auction of $28 billion in Treasuries was set to be the most disappointing of all, after it was trading at a generous +0.50% in the repo market.

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And, predictably, when today's 7Y printed at 2.197%, the lowest yield since October (if above the previous six auction average of 1.883%) it tailed the WI of 2.196% by 0.1bp, as once again there were few overhanging shorts to squeeze.

The internals were average at best, with the Bid to Cover printing at 2.49, above last month's 2.45 but below the 6MMA of 2.50. Indirect demand dipped, with foreign official buyers taking down 63.8%, below the 72.8% in January, and the lowest since October; it was however in line with the 6 month average of 64.8%. Like yesterday, the Direct Bid picked up, and was left with 11.4% of the allotment. As a result, Dealers were left holding 24.9% of the auction, the most since October.

Overall, a mediocre auction, which however was fractionally better than its tailing headline would suggest.

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