AUCTION PREVIEW: Traders are...........>

US TSYS/TIPS:  AUCTION PREVIEW: Traders are cautiously optimistic on today's 1pm

ET $14B 5Y TIPS reopening auction, as investment manager demand is expected, and

a bid too from those who anticipate firmer inflation, tho inflation is quiet

right now. 

- Credit Agricole's Alex Li: Auction shd be a "large liquidity event," and 5Y

TIPS was "tight in the repo" market, indicating good shorts, and breakevens are

at "more attractive levels. But inflation is "benign" and TIPS carry turns

negative "starting in September," he said. 

- SMRA's John Canavan: The $14B 5Y TIPS reopening "will raise all new cash when

it settles on Thursday, Aug. 31st." 

- BMO analysts Ian Lyngen and Aaron Kohli expect "decent" demand at TIPS

auction. "The auction serves a valuable function in aggregating liquidity and

we'd expect the 5-year TIPS auction to do that to an even greater extent." 

- HISTORY: The April $16B 5Y TIPS auction (new) drew strong demand esp.

indirects: a 2.52 bid/cover, a -0.049% high yield, and a stellar 74.2% indirect

award, and 9.2% directs leaving only 16.7% for primary dealers to mop up.