Tsys traded higher, roughly mid-range...>

US TSYS/30Y: Tsys traded higher, roughly mid-range after midmorning and late

morning short-setting into the 30Y bond auction, which traders projected the

$15B 30Y bond auction could go at 2.815% to 2.820% rate. Traders feel the more

price concession, the better the auction demand will go. Tsys saw earlier better

selling down the curve in the 3Y, 5Y, 7Y, 10Y issues, while 30-year bonds drew

mixed trading flows, said observers. 

- Traders have caution as there was a soft Wed $23B 10Y auction after a risk-off

Tsys rally, which followed a stellar Tuesday $24B 3Y auction. US buyers

(insurers, banks and hedge funds) could prevail in the amount of buying at 30Y

auction but still, mild Japanese and Chinese bid cld surface. The weaker US$/yen

could aid Jpn bid somewhat, said observers. Japanese lifers esp.but also

regional banks and other types of accounts buy at 30Y auction, Jpn mega-banks

are rare 30Y auction buyers (prefer 7Y,10Ys); Chinese accounts buy at each

auction maturity. European bid cld arise as Tsys offer more yield than EGBS. 

- HISTORY: July 30Y auction saw 2.936% rate, 2.31 bid/cover, 3.00% coupon, 61.7%

indirects, 6.4% directs, 31.9% dealers.