The U.S. Treasury Department sold $28 billion in 7-year notes on Thursday, with vast majority of the bonds sold coming in near the high price, a sign that demand for this record amount of government debt is still holding up.

Treasury bonds rallied on the news.

The Treasury said it sold $28 billion of notes with at a yield of 3.369%, with 91.73% being sold at the high price. The bid-to-cover ratio, a sign of demand for the security, was 2.63 -- better than the average 2.40 ratio for the product.

“The results are a relief in terms of government funding,” said Peter Boockvar with the brokerage firm Miller Tabak.

The auction gave a boost the Treasury market overall, pushing the yield of the benchmark 10-year note down to 3.647%. Bond yields fall as bond prices rise.

Foreign government and institutional participation in the auction was 62.5%, the Treasury Department said, the best participation by foreign parties this week.

Thursday’s auction culminates this week’s $117 billion in bond auctions, where earlier this week record amounts in 2-year notes and 5-year notes received tepid demand at best.

Traders had expressed worry in recent months that the flood of debt being poured onto the market, with each auction increasing to a record amount, could push yields higher.

"You can expect continued uncertainty around every auction, especially as we head into the August refunding process," said Mike Pond, head of fixed-income trading with Barclays Capital. 

Treasury will auction the 10-year notes and 30-year bonds in two weeks, which will be another key test of whether investors are willing to hold long-term debt, especially with chatter about inflation in coming years.