After Monday's ugly 2Y and Wednesday's abysmal 5Y auction, moments ago the Treasury sold $32 billion - a record amount for this tenor - in 7 Year paper in a surprisingly strong sale, which stopped 0.8bps through the When Issued, the biggest stop through going back to January's 1.2bps, a major difference to yesterday's whopping 2bps+ tail, which came at a time when stocks were soaring and TSYs were being dumped by rebalancing pension funds and other investors. The top-line strength was surprising as this was the lowest stop since the 2.565% in January's 7Y auction, and sharply below November's 2.974%.

Like yesterday, the auction saw a drop in the Bid to Cover, although far less than the 5Y's near-record 1-month drop, with today's 7Y pricing at a bid to cover of 2.459, down from 2.551 in November and below the 2.51 6 auction average.

The internals is where the auction was strongest, with Indirects taking down 67.4%, the highest since January, and well above the past 6 auction average of 61.3%. Directs dropped from last month's near-record 27.0%, sliding to 14.6%, leaving Dealers holding 18.0% of the auction, above last month's 16.3%, but below the recent average of 23.5%.

Overall, a surprisingly solid auction which was surely helped by the rout in the market, and a welcome reversal from two abysmal auctions which had sparked concerns that we may be seeing the start of a mini-rebellion in the US Treasury market.

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And with that, the debt issuance calendar for 2018 is now closed, and bond traders can look toward calendar 2019 when well over $1 trillion in bond issuance will have to be digested.