Ugly 7Y Auction Has Lowest Bid To Cover Since September, Biggest Tail Since 2024

After two “terrible” coupon auctions earlier this week, moments ago the Treasury concluded the week’s final auction when it sold $44 billion in 7 Year paper. It may not have been quite as terrible as the previous two, but it wasn’t much stronger either.

Starting at the top, the auction stopped with a high yield of 4.255%, up sharply from 3.790% in February and the highest since Jan 2025. It also tailed the When Issued 4.247% by 0.8bps, the biggest tail since August 2024.

The bid to cover was 2.432, down from 2.498 last month and the lowest since Sept 2025.

Internals were also ugly as Indirects were awarded just 62.56%, down from 63.57% and the lowest since December 2025. And with Directs dipping (but not as much as the 2Y auction earlier this week which saw a collapse) from 26.01% to 25.03%, Dealers rose to 12.41%, the highest since last November.

Overall, this was another very ugly auction and while foreign demand wasn’t catastrophic it certainly was on the light side, suggesting that in addition to liquidating other hard assets, foreign buyers are becoming cautious with putting more money to funding the US deficit.