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Bid To Cover Tumbles In Ugly, Tailing 7 Year Auction

After two mediocre, tailing auctions, moments ago the Treasury sold $28 billion in 7 year paper in this week's final bond issuance and it was the ugliest of all.

Stopping at a high yield of 2.28%, this was a tail of 0.8bps - the first since July - to the 2.272% When Issued and the highest yield for 7Y paper since January. The Internals were ugly, with the Bid to Cover of 2.391 the lowest since August 2016, and sharply below September's 2.704, as well as the 2.57 past six auction average.

The bidside was weak, with Indirects taking down 63.45%, the lowest since May and below last month's 70.64% as well as the 6 month average of 69.3%. Directs also declined from 18.95% in September to 13.31% this month, while Dealers were awarded 23.24% of the takedown, the highest since Jun and above the 6 auction average of 16.9%.

Overall, this was the ugliest auction of the lot, and may be an indication that US Treasury buyers, both domestic and foreign, are finally starting to lose their appetite.