Following two medicore auction earlier in the week, moments ago the Treasury concluded the week's issuance of paper with a strong sale of $28 billion in 7 Year Notes, which priced at a yield of 2.215%, (with a 19.2% allocation at the high yield), stopping through the When Issued of 2.219% by 0.4% bps, likely aided by this morning's ECB news as well as a reduction in corporate issuance leading to less rate locks, which in turn offset the lack of a short interest heading into today's auction where the repo rate on 7Y paper was a comfortable +0.30%.

The Bid to cover of 2.564 was an improvement from last month's 2.491, and the highest of 2017, in fact it was the highest since November 2016; it was also higher than the last 6 auction average of 2.52.

Indirect Bidders, i.e., foreign buyers, once again stepped up their interest, taking down 71.1%, above the 63.8% from February, and well above the 65.7% 6 month prior average. Direct bidders declined modestly from 11.4% (and an average of 11.7%) to 8.4%, leaving 20.5% to Primary Dealers, below their average of 22.7% in the prior 6 auctions.

As discussed before, if potential bond buyers are concerned about a rapid rate rise in coming years, they are not indicating as much with declined interest at TSY auctions.

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