Tsys recede into the 1pm ET US$23B......>

US TSYS/10Y: Tsys recede into the 1pm ET US$23B 10Y auction, amid pre-auction

shorts/sales and also muted Japanese sales in intermediates. 

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

Sun and Penglu Zhao noted on 10Y auction that "Treasury's plan to increase

issuance on the front end, instead of long end, may continue to benefit 10yr." 

- "The lack of macro events and a persistent low vol environment could also

support belly demand," they said. 

- But they argued also about disadvantages that "continuous flattening of the

curve is making the 10yr valuation unattractive. Balance normalization may still

put pressure on the belly of the curve." 

- HISTORY: Oct. $20B 10Y reopening auction: 2.346% yield, 2.54 bid/cover, 69.1%

indirects, 6.02% directs, 24.9% primary dealers.