Today's 2 Year $36 billion bond auction closed as expected at a fresh all time low high yield of 0.441%, as everyone continues frontrunning the Fed and making a mockery of unsecured overnight market rates. Indicatively, the auction was trading at 0.446% WI, showing just how strong demand is for paper. Furthermore, at 3.78, the Bid To Cover came at 3.78, which is the highest since August of 2007. In terms of takedown, there is no surprise that Primary Dealers took down more than half, or 50.19% specifically, of the auction again: after all the Fed will promptly monetize this debt shortly via one of the tens of billions in POMOs coming down the road. Directs were responsible for 10.78% and indirects took the balance or 39.04%, higher than the recent average of 34.14%. Yet even with the collapse in the 2 Year yield today, the 2s10s is still plunging, and has now hit 208, an 8 bps drop on the day, as ever more investors are shifting their purchase ever more to the right in anticipation of QE2.