Today's $29 billion 7 year auction closed at a high yield of 1.97%, which following suit recent 2 and 5 Year auctions was an increase in the stop out yield. Still, it was the second lowest recorded since the reintroduction of the 7 Year in February 2009. More interestingly, the Bid To Cover came at a record high of 3.06 compared to 3.04 previously and 2.84 average in the prior year. This means the belly of the Treasury curve continues to be very well bid, although with the majority benefit of the Primary Dealers. PDs took down 50.22% of the auction (compared to a 50.34% average), leaving 10.9% to directs, and 38.88% for Indirects. This was an increase in the Indirect take down from 36.4% previously, and ends the decline in Indirect bids seen previously in the 2 and 5 year, confirming that even foreigners continue to seek yield above all. Bottom line: with QE2 around the corner, there is no shortage of demand for paper.