In the week's final coupon auction, the US Treasury sold $44 billion in 7 Year notes to stellar demand. 

Extending on the strength yesterday's solid (if tailing) 5 Year auction, today's 7 Year sale printed at a high yield of 4.290%, up from 4.175% and the highest since Jan 2025. It also stopped through the When Issued 4.291% by 0.1bps, the first stop through since December 2025.

The bid to cover was 2.518, up from 2.513 and the highest since July 2025; it was obviously higher than the six-auction average of 2.478.

The internals were stellar, with Indirects surging from April's los 58.35% to a stunning 78.39%, the 3rd highest indirect award on record!

Naturally, for Indirects to soar this much, one of the other two categories had to drop, and sure enough Directs plunged from 30.01% to 11.19%, the lowest since December 2024. Dealers were left largely unchanged at 10.42%, down from 11.64%.

Overall, this was a fitting close to a solid week for Treasury auctions, as today's 7Y auction was an absolutely blockbuster, with all metrics stronger but it was the surge in foreign demand that was the showstopper. It appears that EMs are no longer dumping US paper - which they did in record mounts in March and April - to fund oil purchases and to prevent their currencies from crashing.