Treasuries see some mild...............>

US TSYS/TIPS: Treasuries see some mild short-setting into the 1pm ET US$5B 30Y

TIPS reopening auction. Tsys also saw light profit-taking on the safe-haven bid

gains spurred by Spain/Catalan worries, US stock jitters etc.

- Nomura Secs N.American head of rate research George Goncalves and analysts

Stanley Sun and Penglu Zhao are "cautiously constructive" on TIPS demand. "On a

relative basis, the 10s/30s real curve still looks

steeper than the 10s/30s nominal curve, which might help bring some demand,"

they said.

- They added "expectations for fiscal stimulus were elevated in the equity

space, which might help boost demand appetite for long end TIPS. A rebound in

energy prices is also supportive for demand."

- But they also warn on such TIPs auction that the "negative carry on a

breakeven basis may not be favorable."

- HISTORY: The $5.0B June 30Y TIPS reopening had a 0.875% coupon rate, 2.83

bid/cover, 0.880% high yield, and a high 76.1% indirects and good 8.44% directs

leaving only a small 15.5% for dealers to mop up.