And BMO's Aaron Kohli points out other...>

US TSYS/3Y: And BMO's Aaron Kohli points out other 3Y auction positives such as

the "slight positive seasonal bias for 3-year auctions to stop through 1pm

levels with four of the last seven September auctions doing so. That's not huge

given the sample size, but we've also stopped through at the last three

auctions. Furthermore, seasonals over the last five years do imply a bias for

yields to fall with the peak in mid-September." - He adds "flows are marginally

positive with the ETFs we track getting roughly 100 million in over the last

month." He said 3Y notes "look slightly richer in repo though not rich by any

means, and the Fed will not be buying anything at the auction." 

- But Kohli also warned "the 3-year remains vulnerable to event risk with CPI

later this week though given the recent spate of humdrum prints, we'd see more

reason to buy on a CPI-inspired backup then sell into it." He said "front-end

futures are still short, but much less so than in the past. That presents a

small negative as it implies fewer short-covering buyers this week." 

- He added that "net new cash is a bit higher this week at $29 billion which is

worse than the past few cycles which have seen smaller net cash raises."