As we reported yesterday, the surprising catalyst which for some still unknown reason unleashed yesterday's torrid market rally and selloff in Treasurys, was the announcement by the US Treasury that it would reschedule yesterday's 7 Year auction due to "technical issues."
Moments ago this auction finally priced, this time without any drama, and what a difference 24 hours makes.
While yesterday the 7 Year was trading at about 1.43%, moments ago it priced at a yield of 1.568%...
... which while the lowest since May 2013, was in two words, an "ugly mess", railing the When Issued of 1.542% by a whopping 2.6 bps, the biggest tail since October 2011, and suggesting that there may well have been a buyer strike both today and perhaps yesterday as well. As a reminder, the Treasury has not provided any details on the reason for the delay.
The internals were just as ugly: the Bid to Cover closed at 2.25, far below last month's 2.63, below the 12 MMA of 2.46 and in fact the lowest since February of 2009.
Finally the allotment was a disappointment as well, because following January's record Indirect takedown of 69.4%, this time foreign central banks ended up holding only 53.5% of the final auction, with Directs responsible for 14.2% and Dealers holding 32.3%.
Overall, a very ugly auction and one which still leave many questions to be answered, most importatnly why did it not take place at its scheduled time yesterday. We will likely never know.