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

US TSYS/RESEARCH
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."

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