Traders expressed some mixed views on....>

US TSYS/7Y: Traders expressed some mixed views on today's 1pm ET US$28B 7Y note

auction, which could benefit from a chunky 0.11-yrs estimated Bloomberg/Barclays

US Tsys index extension into the month-end. But some observers called for a bit

more price concession. "This is the end of the 2/5/7Y auction supply," said one

observer. "And the big month-end index extension looms." 

- But JPM analysts noted 7-yr yields "declined by roughly 7bp since the October

auction, and are trading near the middle of the range they have held for the

last month. Along the curve, the 7-year sector looks fairly valued vs wings

after adjusting for the level of rates and the shape of the curve. Also, the

7-yr roll opened at +1.125bp and is now trading at +0.625bp, outperforming the

erosion of carry. Taking these factors together, we think that tomorrow's

auction will require some concession to underwrite smoothly." 

- They noted Oct 7-yr auction "stopped at 2.28%, 0.9bp cheap to pre-auction" as

"end-user demand fell 9.9%-pts to 79.7%, the lowest level since July 2017. The

investor auction allotment details show that the weakness in end-user demand was

largely driven by a 13%-pts decline in investment manager sponsorship."