A good auction

Reflecting an opinion on duration, as part of a broad mosaic, the 7 yr note auction was pretty good. The yield of 4.185% was below the when issued of 4.193%. The bid to cover of 2.61 was above the one year average of 2.54. Also, direct and indirect bidders took down 87% of the auction which is the most since last October, leaving dealers with the least since then.

Ahead of PCE Friday (though with CPI and PPI already out, it rarely deviates much from expectations), jumpy commodity prices and inflation expectations (though down the past 2 days), US debts and deficit challenges only getting worse, an intensifying debate on the direction of the US economy, calmness in overseas bond markets, particularly Japan after the policy change, and hopes that central banks around the world will be cutting rates this year (outside of Japan), the 7 yr note auction was a good one.