Traders' expectations sweeten up a bit...>

US TSYS/2Y: Traders' expectations sweeten up a bit heading into the 1pm ET

US$26B 2Y note auction, amid price concession due to worries in case the next

Fed Chair is potentially hawkish. The auction should draw US and a foreign bid,

but traders differ on the amount of foreign buying to expect after a tepid 6%

foreign portion in Sept. 2Y auction. Some believe though that foreign buying has

rebounded a bit since such Sept. 2Y auction. 

- "It will be okay," said one trader. "We have a concession. The long end is

underperforming." 

- A different trader said 2Y note was pressured by "the hype about the next Fed

chair, as they have been bringing down the market pretty hard in the front end."

- HISTORY: The Sept. 26B 2Y note auction drew a 1.462% rate, 1.375% coupon,

2.88% bid/cover; and 44.15% indirects, 19.04% directs and 36.81% primary

dealers.