Traders are moderately optimistic on.....>

US TSYS/7Y: Traders are moderately optimistic on demand for the 1pm ET US$28B 7Y

auction, as it has a price concession amid overall mkt decline Thursday. Traders

expected US and foreign buyers at 7Y sale, including Japanese and Chinese

accounts and maybe mild European interest. "This is a maturity than foreign

accounts like," said one trader. "We did see foreign buyers at the five-year

note auction Wednesday." 

- The 7-year note also offers fair value on curve, and should draw month-end

buying too into Monday, July 31st month-end. Also there won't be too much other

coupon supply issuance until August refunding.

- Challenges might include buying ahead of the seven-part AT&T debt deal but

that was said to have good demand at $40B rumored order book for what might be a

$15B-ish debt deal. And some may not want to buy ahead of Friday's key 2Q GDP

report. "It might be hard to load up ahead of that," cautioned one trader. "Also

a lot of analysts are upgrading their GDP estimates." 

- HISTORY: The June $28B 7Y auction drew a 2.056% rate, 2.46 bid/cover, and

65.4% indirects, 9.41% directs and 25.2% primary dealers.