If there is any concern of massive curve flattening, or even inversion, the bond market sure wasn't aware of it today when moments ago some $29 billion in 2 Year bonds were sold at a yield of 0.530%, stopping through the 0.532% When Issued, and below the 0.544% from last month which was the highest since May 2011.
The Bid to Cover rose from 3.220 to 3.479%, the highest since May's 3.519%, and certainly not hitting of any lack of demand for the short-end. The internals showed a marked move away from Directs, who took down just 12.14% of the auction, half of the TTM average of 23.4% and the lowest since June 2013, however this was more than offset by the surge in Indirects, whose 39.8% was the highest since March when they were allotted 40.93%. Finally, Dealers were left holding less than half of the bag, or 48.0%, only the first time PDs ended up with less than half the auction since March 2014. Overall, a rather strong auction, as can be further validated by looking at the move tighter across the curve.