And BMO's Lygen added that while...>

US TSYS/RESEARCH: And BMO's Lygen added that while "there the near-term offers

us several reasons to sell US Treasuries (supply, Fed pick, ECB tapering,

breakeven strength, etc), the longer-term outlook leaves us much more guarded

against the prospects for higher yields. For one, positions and sentiment

continue to move against Treasuries and the contrarian in us finds some value to

leaning against the market. We're not at extremes in those measures yet, so the

trade could still have some room to run, but a strong turn to strength in USTs

would be a "go with" event because of this backdrop."

- He adds "the upcoming Treasury refunding" announcement "on Nov. 1st offers not

just the possibility of nominal size increases, but also potential for chatter

around ultra-long issuance. We're not expecting a new ultra-long but may see a

well-choreographed size increase in nominals, with the obvious caveat that the

Dec. 8th debt ceiling extension date could delay the Treasury from pulling the

trigger on nominal size increases."