FTN Financial's Jim Vogel said the 5Y....>

US TSYS/5Y: FTN Financial's Jim Vogel said the 5Y auction award "at 1.742% came

almost 1bp thru the WI bid of 1.751%, that had been the market median level

since the 2-yr auction. Only 19% were allotted at the high yld as indirects

piled in for 69.1% of the transaction. Bid/cover was 2.58x, much closer to

recent sales than the low end seen on 2s. Dealers are now short, getting only

17.5% of the sale."

- He added "dealer participation was 7-15 percentage points below the norm" at

the 5Y auction, "and the lowest in about a decade," amid good customer interest.

- Vogel noted that "spreading flood waters in Texas created a more somber mood

in stocks and bonds since the update on the 2-yr sale. Tentative selling on the

30-yr has picked up before the 5-yr auction, as squishier stocks need fewer risk

hedges from long UST. The change in tone is bigger than the change in prices.

But, the slump in energy stocks has gotten more pronounced."