After two stellar auctions, moments ago the US Treasury concluded the week's issuance of coupon paper by selling $32 billion in 7 year paper, and which following impressive demand for both 2 and 5 year auctions, once again confirmed that there is no lack of interest in US paper.
The high yield of 1.657%, while modestly higher than September's 1.633%, stopped through the When Issued 1.664% by 0.7bps, the biggest stop through since March.
The bid to cover was virtually unchanged from last month, coming in at 2.457, which while down from 2.492 was well above the 6 auction average of 2.36.
The internal were the most impressive, however, with Indirects taking down 65.4%, which was not only above last month's impressive 65.2%, but was also the highest since December's 67.4%. And with Directs taking down 14.5%, Dealers were left with 20.1% of the final takedown, the lowest Dealer allocation since March.
Overall, another very strong auction, which is to be expected in a time when Europe is sliding into recession, China can't get its credit impulse to bounce, and the Fed is not only cutting rates but also boosting its balance sheet by tens of billions each months.