Following two disappointing auctions earlier this week when first the 2Y and then the 5Y auctions either demonstrated a substantial drop off in bid-side interest or priced wildly through the when issued, we said to await today’s 7Y auction for the true picture of demand for primary paper, as the first auction took place when Europe was out for Easter vacation, and the second one took place just as Yellen speaking at the Economic Club yesterday.

And indeed, if the 7Y is an indication, the demand for US paper remains quite solid, especially at the belly of the curve where moments ago the US Treasury sold $28 billion in Cusip Q29, at a yield of 1.606%, stopped inside the 1.61% When Issued.

The internals were also solid, with the Bid to Cover of 2.51, rebounding from last month’s 2.46, and also above the 12TTM average 2.45. The Indirect bid also picked up, with foreign official entities taking down 57.8% vs 53.48% last and also above the 12 month average of 55.5%, while Direct bidders ended up with 15.5% of the final allotment, the highest since August 2014. This means Dealers ended up with just 26.7% of the auction, down from the 32.3% in February and also below the 12 month average, confirming perhaps that any weakness seen in the past few days’ auctions was merely a fluke.