Traders are cautiously optimistic on.....>

US TSYS/7Y: Traders are cautiously optimistic on moderate US/foreign bid at 1pm

ET $28B 7Y auction;  yr-end lighter volume cld moderate demand. There could be

month-end buying in the 7Y auction; Bloomberg/Barclays Tsys index +0.07 yrs at

month-end. Traders expect demand by US, Asia, Europe etc. There has been some 7Y

shorts/sales to set up price concession.

- FTN's Jim Vogel: "few are worried" on 7Y auction; "steeper 5s/7s curve in the

last 2 wks creates value for bidders between 2.35%-2.40%. FTN's tgt is 2.37%".

- Cantor's Justin Lederer expected "buyers" in 7Ys "aided by mo-end/qtr-end" but

like Wed 5Y, "wd not be surprised by a tail" given "time of yr;" 7Y may be

"underwritten at the highest auction stop since Dec (2.385%)." 

- Jefferies economists Ward McCarthy and Tom Simons: 7Y "will pay down $2.5

bln." They warn Nov 7Y auction came with "widest tail since Feb'16"; given

"tepid demand" at 2Y, 5Y auctions, "repeat performance may be in the cards" at

7Y." 

-HISTORY: $28B Nov 7Y: 2.230% rate, 2.36 cvr, 58.6% indirect, 13.7% direct,26.8%

dealers