FTN's Jim Vogel said "vs WI bid of.......>

US TSYS/7Y: FTN's Jim Vogel said "vs WI bid of 2.365%, a 0.5bp tail to 2.370%

award" at recent 7-yr  note auction is "within acceptable limits, particularly

given the block sale in 30-yr futures shortly before the deadline. Dealers own

26.4%, a manageable amt for late December, plus they get to use the tail to help

resales. Bid/cover was solid 2.55x or slightly above avg. Allotment at hi yld

was 57.4%."

- He adds "active traders have absorbed this wk's lesson: Don't actively trade

the last 2 wks of the year. US Treasury yields have ignored the increase in EU

rates today, perfectly willing to revisit the question next wk. While

yesterday's EU rally was an overreaction to thin news, the retrace has been on

selling that has no apparent trigger. The country with the most news - Italy's

possible new elections - has the least yld volatility. With the exception of

Greece, Italy now has the highest yields among the EU leadership. It is the

third largest country in the union, but tries not to act like it."