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Traders expected fairly good appetite...>

US TSYS/10Y
US TSYS/10Y: Traders expected fairly good appetite at 1pm ET US$23B 10Y auction.
But it may potentially not be as strong as the 3Y auction, which drew very heavy
demand. Traders also expected US and Asian (China Jpn) demand too. 
- Nomura's George Goncalves, Stanley Sun and Penglu Zhao said "renewed
geopolitical concerns could help support auction demand" and curve valuations
"still look attractive." But they cautioned "positioning suggests the curve may
steepen, especially as the market's expectation for ECB tapering continues to
draw closer." Also "foreign takedowns for 10yr have been declining recently, as
they may have shortened their duration exposure," they said.
- BMO's Ian Lyngen was "encouraged" by strong 3Y bid Tue; while "correlation to
the 10-yr" is not "1-for-1, we cannot help but be impressed by the strongest
non-dealer award since 2009 (2nd highest on record)." He expected "good" 10Y 
sponsorship "and would expect that a yield anywhere over 2.25% wld be
attractive" to "marginal buyer" as it's "become the line in the sand."
- 10Y HISTORY: July $20B 10Y reopening: 2.325% yield, 2.45 bid/cover, 64.8%
indirects, 5.75% directs, 29.45% dealers.

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