JPM analysts Jay Barry and Jason...>

US TSYS/RESEARCH: JPM analysts Jay Barry and Jason Hunter noted US Treasury

"will auction $23bn new 10-year notes at 1pm" Wed, "unchanged in size from the

last new-issue auction in August." 

- "The October auction cleared at 2.346%, 0.1bp through pre-auction levels as

end-user demand rose 13.8%-pts to 75.1%," they said. "Specifically, investment

manager demand rose 10.7%-pts to 58.0%, well above the 6-auction average, and

foreign sponsorship rose 3.0%-pts to 13.4%. 

- They noted since Oct 10Y auction, "10-year yields have declined 4bp but remain

near the upper end of their 3-month range. Along the curve, the 10-year sector

appears fairly valued after adjusting for the level of yields and the slope of

the curve. The 10-year roll opened at -0.875bp and has narrowed to -1.125bp,

roughly in line with the erosion of carry. However, we note that over the past

year, all four new-issue 10-year auctions cleared with a tail, by an average of

1.9bp, and were met with lower end-user demand compared with reopening auctions.

Given these factors, we expect tomorrow's supply may require some concession

from current levels to underwrite smoothly."