First, the size: at $56 billion the auction was another all time high, up from $54 billion last month, and more than double the average auction size in the period 2014-2017. With US deficits exploding, expect the size of all auctions to continue into the stratosphere.

The auction stopped at a high yield of 0.165%, just above last month's 0.151%, but stopping through the 0.167% When Issued perhaps due to today's risk reversal, which was notable after 2 consecutive tailing 2Y auctions.

The most notable feature of today's auction was the jump in the bid to cover, which rose from 2.41 last month to 2.71, well above the recent six-auction average of 2.52 and the second highest since April 2020.

Yet despite the strong bid to cover, there was some weakness was in the Indirect takedown, which slumped from 52.4% to 46.1%, the lowest since July and below the 52.3% recent average. And with Directs taking 15.7%, or almost unchanged from last month's 15.6%, Dealers were left holding 38.3%, the highest since July.

Due to the holiday's shortened week, this is just the first of the day's two auctions, with the sale of 5Y notes (also a record amount) on deck at 1pm today ahead of tomorrow's 7Y sale.