Traders are cautiously optimistic on.....>

US TSYS/3Y: Traders are cautiously optimistic on demand at 1pm ET US$24B 3Y

auction amid nomination of status quo Fed Chr Powell, relatively small auction

size, and some safe-haven bid amid Mideast/ N.Korea on/off jitters. So US buyers

were expected to show up at wjith also some foreign/Asian buyers (though some

other foreign/Asian accounts may be tempted to do US dollar FX basis lending

instead.) 

- "It will be fine," said one trader. "It is not a big issue. It will come plus

or minus 0.3% of a bp from where it is at the auction time." 

- Nomura analysts cited Powell and "attractive" vol adjusted carry/roll on front

end as 3Y pros, but "wide" FX Basis and "slowing" foreign central bank buying in

Tsy could hurt bid. 

- JPM analysts expected 3Y to go "without a problem" and noted Oct foreign

demand rose 5.8%-pts m/m in Oct to 20.6% from "weak" 14.8% Sept. 

- HISTORY: Oct $24B 3Y auction drew a 1.657% yield, and 54.3% indirects, 7.1%

directs and 38.6% primary dealers; 2.83 Bid/cvr (2.7 Sep, 3.13 Aug)