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*** Traders appear cautiously...........>

US TSYS/10Y: *** Traders appear cautiously optimistic on 1pm ET $20B 10Y
reopening auction, but only as long as WI 10Y stays cheap, said some. Traders
believe it will draw a rate between 2.168% and 2.180%; they expect good US bid,
less foreign bid (lighter Japanese demand potentially, mild Chinese bid) 
- Some believe auction has "decent" price concession, enough for US and foreign
buyers. Others noted 2.18% level is a 30-day moving avg, which mkt held since
early Aug. 
- They urged "go with" whatever is prevailing Tsys direction after auction. "It
will be more of a binary result than usual," said a trader. "If it goes well,
the mkt would recover. If not, the mkt will be nervous into the 30Y auction
- Other traders mentioned mkt had selling Mon and Tues (unwind of last wk's
risk-off rally). "So, maybe it's time to buy," said a trader. "This is not like
your usual selloff: it does not feel like there have been many sell-stops hit." 
- HISTORY: Aug. $23B 10Y auction drew a 2.250% coupon, 2.250% yld, a 2.23%
bid/cover and 57.9% indirects, 6.81% directs, so 35.3% dealers.

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