Tsys traders have some cautious..........>

US TSYS/5Y: Tsys traders have some cautious optimism for the 1pm ET $34B 5Y note

auction. Traders eyed potential US and foreign bid, and noted there have been

good 5Y shorts for weeks, tight in O/N Repo. Some eyed potential month-end bid;

Bloomberg US Tsys index is 0.07 yrs into month-end. 

- JP Morgan analysts said 5Y "yields have risen 10bp since the last auction;

noted August 5-year auction "cleared at 1.742%, 0.5bp through pre-auction

levels, as end-user demand rose 6.6%-pts to 82.5%, a record for the series" and

"largely driven by foreign participation, which rose to its highest share since

June 2016." 

- BMO Kohli: Eight of past 13 Sept 5Y auction stopped thru; "positive" seasonals

"for all USTs" for next few wks. 

- HISTORY: The $32B Aug 5Y auction proved very strong: 1.742% high yield, 2.74

bid/cover, high 69.1% indirects, 13.5% direct, 17.5% dealers.