Auction stats can be confusing.  If you need a refresher, here's the primer.

• 10yr Auction
  • Yield = 2.995 vs a when-issued yield of 2.995
  • Bid-to-cover = 2.56x vs an average of 2.3-2.4x (2nd highest BTC in more than a year)
  • Indirect bid = 63% vs average of 62%

In and of themselves, these stats are just fine.  It's "A to A-" sort of stuff, especially if we're looking at the "on the screws" yield award (2.995).  Reason being: the yield award for this type of auction (a REFUNDING) tends to come in 1.2bps higher than the when-issued yield.  So it wouldn't have been a surprise to see a yield award of over 3.01%.  

But when we consider the recent context, the auction is just "OK."  In other words, we wouldn't be seeing these relatively strong stats if the auction had taken place 2 days ago when yields were under 2.95%.  It took the recent bond market weakness to entice the strong demand.  It would have been nice to see a real blowout that confirmed a deluge of demand for bonds with near-3% yields, but alas.  It was more like "yes, we agree 3% yields make some sense and we are certainly willing to buy some at these levels."

That mild sort of praise/support has been worth a mild improvement since the auction.  Emphasis is on "mild" as 10's are only down by about half a bp since 1:01pm (still up 2.64bps on the day at 2.999%).  Fannie 3.0 and 4.0 MBS are still down an eighth of a point.

NOTE: recent spikes to extreme lows in MBS prices today are not "real," as you may have guessed if you've ever read this primer: Why Did MBS Just Inexplicably Tank?