It only took virtually all the Fed's hawks and doves to undo Bernanke's damage from last week, and jawbone the markets into submission, and halt the stock and bond selloff. Although, judging by yesterday's dismal 5 Year bond auction, few were convinced that the bond market was stabilized. Which is why today's belly buster, 7 Year auction - the last of the week - was going to show just how much more daily sermons from the Marriner Eccles priests we would get ahead of next week's 10 and 30 Year auctions. Not surprisingly, it performed admirably, and was far stronger than this week's previous 2 and 5 years weak placements.
To wit: yes, the yield was the highest since July 2011, as was to be expected, however unlike yesterday's collapse in the Bid To Cover, today's bidside interest was solid, with a BTC of 2.61, just off last month's 2.70 and not much below the TTM average 2.67. The internals showed that while Dealers took just 3.784%, or the lowest since December, it was the Indrects again that loaded up on a disproportional amount of paper, which at 46.44% was the biggest Indirect takedown since August 2011. And while the Direct allottment of 15.72% was below May's 20.68%, it was just below the TTM averge of 17.26%. In other words, a far better auction and a much better tone to close this week's Treasury auctions. Now if only the US Treasury actually had permission to issue net debt instead of having to squash various retirement funds in order to make room for yet another day's billions in deficit funding, while the US remains and will remain at its debt ceiling for the next 5 months...
