And BMO's Aaron Kohli said on 7Y.........>

US TSYS/7Y: And BMO's Aaron Kohli said on 7Y auction positives: "foreign flows

have been solid in 7s, though this isn't as much of a sweet spot for foreign

buyers as the 5s and 10s. That should still boost the demand for the note at

auction, however. Foreign buying has been stable at around 15%. And given the

MOF data last week, and the seasonal buying from Japanese investors, we'd expect

some foreign demand to show up today."

- He adds 7Y "volumes are high" with "good swath of the day's flows at 12% of

the market share and 175% of the 10-day moving average to the overall mkt's

145%," which is "historically enough of a spread to suggest a stop through."

- But he warns if Fed starts to use rate hike timing as "way to respond to

softer data, we'd be better fans of 5s, which will rally more strongly as future

hike paths are priced down in response to weaker data. 7s sit at the fulcrum of

rates moves, and more delays to hikes will likely steepen the curve past the

7-yr pt, and flatten it in the 2 to 5-yr maturity range." 

- He adds ETF "flows are negative now" with belly "losing about $250M in flows

over the last month."