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US TSYS/30Y: Traders have some caution into 1pm ET Thurs 30Y bond auction after
a stellar Tuesday $24B 3Y auction but so-so Wednesday $23B 10Y auction, which
however now trades at a profit.
- Traders believed moderate demand should surface at 30Y sale as they
anticipated good Japanese and Chinese buying; 10Y auction came at pricey levels
after Tues/Wed safe-haven bid rally on N.Korea worries.
- Japanese accts feel US economy will bump along near-term so Fed may be on
hold, so they could buy. Japanese accts did good buying in Tsys in most recent
week as Japanese MOF data showed net buyers of foreign bonds of Y106.70
- Chinese demand is expected as China FX reserves and Treasuries holdings are
both growing, said traders, and "they tend to buy the whole curve" in
Treasuries, taking a dollop at each maturity. Others expect Europe bid as Tsys
are cheap, offer more yield vs Europe bonds. - SMRA analyst John Canavan said
30Y auction will "raise $10.177 Bln after accounting for the $4.823 Bln maturing
bond, excluding SOMA holdings."