After today's very ugly 4-Week Bill auction, moments ago the bond market redeemed itself somewhat when it sold $29.1BN (including $3.1BN in SOMA) in 2 Year paper. The high yield of 1.316% stopped through the 1.322% When Issued by 0.6 bps, which was the biggest "stop through" since last August. Perhaps the yield was a factor: at just below 1.32%, this was the highest auction stop on 2Y paper since October 2008.

The internals also came in strong, with the Bid to Cover rising from 2.853 to 2.904, the highest since May 2016, with total bids of $78.6BN for $29.1BN in notes sold.

Indirects took down 57.15%, below the 58.9% in April, but above the 46.6% average of the last six auction. Directs took down 12.4%, in line with recent history, leaving 30.45% to Dealers, below the 41% 6MMA.

In summary, a strong auction which the bond market was desperately in need of following some very disappointing Bill and Coupon auctions over the past few weeks.