Today's $29 billion in 7 Year bonds closed at a 2.74% high yield (95.59% allotted at high), a slight drop from the 2.83% in December. The Bid To Cover was 2.85, a hair less than the 2.86 in December, and in line with the last 12 auction average of 2.875%. The auction came well inside of the When Issued, confirming the auction was much stronger than expected. As a result the entire bond complex has seen prices jump on the back of the very well accepted auction. Indirects, who have recently been skittish from left of the belly auctions showed some modest enthusiasm and bought up 42.2% of the auction, almost certainly to turn around and sell it in the open market, as the Fed is a 1:1 buyer for all gross issuance in 2011: i.e., the fact that Indirects taken down close to half is pretty much meaningless.