And BMO's Aaron Kohli noted at.......>

US TSYS/SUPPLY: And BMO's Aaron Kohli noted at today's 11:30am ET $24B 3Y

auction, "the Fed will not be buying any supply at this auction, which could

make repo levels marginally richer in the next cycle. 3s aren't often very

special in repo, so this is only a slight benefit." 

- But he cited disadvantages as "3-yr is very much exposed to the economic and

Fed calendars in the week ahead, with the risks of a December rate hike mostly

priced into the curve, but the potential for increased hike pricing in 2018

still leaving room to sell off. CPI remains a real risk to the 3-yr as well if

we see another strong bounce across multiple categories." 

- He adds with "curve flattening as our core view for the year ahead, it's

difficult to be supportive of 3s on the curve without a stronger dovish signal

from the Fed." He said this week's "truncated auction schedule featuring 3s and

10s on Monday may handicap demand for the morning 3-year auction." 

- He noted "net new cash raised in this cycle is higher than the norm for the

3s/10s/30s auctions at $31B" vs "$19B in November," which could make "the

marginal supply more difficult for the market to take down."