On Thursday we’ve seen the exact opposite of the dynamic that prevailed earlier in the week with regard to the reflation trinity of yields, the dollar, and stocks.

Whereas it’s been yields and stocks moving higher while the dollar remained under pressure, today it’s been the other way around, with yields lower and stocks treading water while the dollar has found its footing.

Today’s 7-year auction went off a lot better than yesterday’s 5Y sale as the indirect bid suggests foreign interest may be picking up on the back of rising yields and expectations of further G3 policy divergence. Here are the headlines:

• High yield 2.335% vs six previous auction average 1.717%
• Bid-to-cover 2.45 vs six previous auction average 2.51
• Indirect bidders awarded 72.8% vs six previous auction average 63.6%
• Direct bidders awarded 6.6% vs six previous auction average 11.7%
• Dealers awarded 20.7% vs six previous auction average 24.8%

As indicated by the bolded bullet, this was the highlight:

UST 7Y AUCTION 72.8% INDIRECT AWARD HIGHEST ON RECORD

(Citi)

And the reaction: