After Wednesday's Tsy refunding.............>

US TSYS: After Wednesday's Tsy refunding announcement which saw $1bln supply

increases across the maturity spectrum, with 2s & 3s set to increase by a

further $1bln/month over the next 2 months, TD expect auction sizes to continue

increasing in the coming quarters i.e. supply increases at the August, November

and February 2019, with 2s, 3s, & 5s increasing by $1bln/month, while they

expect that FRNs, 7s, 10s & 30s will increase by $1bln/quarter.

- TD believe that "this should increase term premium and put upward pressure on

rates, all else being equal."

- As a result they remain short 2-Year Tsys vs. OIS.

- TD exp. the Tsy to announce a new October 5-Year TIPS in August, but this will

require some modifications in the current auction calendar. TD exp. the second

5- & 30-Year re-openings to be scrapped, steepening the 5s30s BE curve. Despite

increased coupon issuance, TD believe that the Tsy is "likely to lean heavily on

bill supply again in FY2019. Bill issuance & higher USD funding needs due to

repatriation should continue to keep FRAOIS wide."