Lots of potentially-confusing auction-related jargon follows...  Read THIS if you're not familiar with it.

• 5yr auction high yield: 1.884 vs 1.897 expectations
• Bid-to-cover 2.58x vs 2.40x avg
• Indirect bidding 69.8% vs 63.6% avg

In and of themselves, these stats are very strong.  In a vacuum (without consideration for recent trading patterns), this is an "A+" auction.  When we consider yesterday's big selling spree, however, and try to imagine how the auction might have fared if it happened before that rise in yields, we can be quite certain the stats would have been much weaker.

In other words, it took a certain amount of weakness to facilitate these great results--an auction "concession," as market participants refer to it (lower bond prices making it easier for investors to bid). 

Even with the caveats, it was still strong enough to have a noticeable impact on 10yr yields.  Too, we might throw in a caveat in our favor, saying that auctions tend to be weaker ahead of Fed announcements (thus adjusting the handicap described above back toward more neutral territory).

In super plain words: recent bond weakness meant this auction should do better than average and the presence of the Fed announcement in less than an hour meant this auction should do worse than average.  So the strong result shouldn't be disregarded on a technicality.

10yr yields agree, having rallied more than 0.01% in the past few minutes--now down to 2.323 after earlier highs of 2.337.  Fannie 3.5 MBS are up to the highs of the day at 102-23.

The Fed Announcement is the next big to-do at 2pm.