Traders said the 1pm ET US$34B 5Y........>

US TSYS/5Y: Traders said the 1pm ET US$34B 5Y auction may "be a little more

difficult than the 2-year note auction," which drew so-so demand today amid thin

summer liquidity. They add that it's tough to call this 1pm ET 5Y auction, but

believe it will draw a 1.750% to 1.760% rate; traders appear to feel it should

draw a US and foreign bid including potentially from Japanese or Chinese

accounts. A price concession would help demand they said. 

- "It may come back a little bit," with a higher yield backup, said one trader.

"But it has been very well bid because of the flatter curve," he added. 

- One trader sighed that the Tsy was doing 2Y and 5Y auctions in a single day,

unusually heavy supply, and the "volume is like 55% below average. I would think

the 5-year auction will come north of here, at 1.760%." 

- HISTORY: July $34B 5Y auction drew a 1.884% high yld, 1.875% cpn, 2.58 cover,

strong 68.8% indirects, 6.2% directs, low 24.1% dealers.