Traders said Monday's strong $34B 5Y.....>

US TSYS/7Y: Traders said Monday's strong $34B 5Y note auction provides a better

backdrop for Tuesday's 1pm ET $28B 7Y note auction, as the would-be buyers are

thinking the US yields will keep moving lower. The 5Y auction Monday had the

lowest 5Y auction dealer amount, 17.5%, since 2009, due to that auction's strong

directs and indirects. 

- But SocGen analyst Shakeeb Hulikatti said the "7y note auction will likely

require some price concession due to the lack of a set-up in terms of relative

value and rich outright levels, with the 7y note yield trading below 2%. This is

lower than the stopout rates from the last nine auctions and will likely result

in a lower coupon of 2%. The previous three 7y note auctions tailing is another

negative."