What does today's price action for the 7yr auction tell us?

There are 2 remaining forces at work in the treasury market today (only 2 because the 11am bond buyback has come and gone, as well as the 1pm 7yr auction).

1)  pre-month end treasury buying for tomorrow's month end index extension
2)  stocks selling off which should result in treasuries rallying

So, we have 2 bullish forces, and 1 supply force (7yr auction).  This would tend to indicate that treasuries should be acting strong.  However, if we look at the stocks vs bonds correlation, we see that this balance of forces was subdued today as the recent stocks vs bonds gap has been just about closed (blame the 29bln 7yr auction for that). 

Of course, the next question is, "what now?"  The monthly cyclical is still bullish headed into tomorrow's month-end index extension.  However, there is no undersupply condition embedded in the market, so any bullish price action will be limited to "randomness" and stocks weakness around the center of value, and potentially a mode shift.  The mode from yesterday / today's early morning mode of 133-29 worked great to help us "buy the dip" yesterday.

Unfortunately, its too early to tell where the next afternoon/overnight mode will end up, and thus, what the bell curve ranges will be, so its "wait and see" time until tomorrow morning for me.

govttrader out...