Traders expect reasonably good demand...>

US TSYS/10Y: Traders expect reasonably good demand at Wed 1pm ET US$23B 10Y note

auction. Traders anticipated also good Japanese and Chinese buying, with

thinking such buying was reflected in the strength of Tues' $24B 3Y auction. 

- Japanese accts feel the US economy will bump along near-term so the Fed may be

on hold, so they are buying reportedly including Japanese Post Bank (Kampo) and

mega-banks, said traders. Japanese accounts did good buying in Tsys in the most

recent week as Japanese MOF data showed net buyers of foreign bonds of Y106.70

(US$9.6B). On a related note, Japanese accounts such as Kampo (Japanese Post Bk)

and Jpn mega-banks like the "7-year note to 10-year notes", said traders.

- Chinese demand also is expected as China foreign exchange reserves and their

Treasuries holdings are both growing, said traders, and "they tend to buy the

whole curve" in Treasuries, taking a dollop at each maturity. But the big Asian

central banks like the 2Y, 3Y Tsys too.

- Others expected European demand since Treasuries are cheap to European debt as

offer more yield to yield-starved investors.