BMO analyst expect a "decent" 1pm ET...>

US TSYS/TIPS: BMO analyst expect a "decent" 1pm ET $14B 5Y TIPS reopening

auction, but "struggle with gauging the influence of TIPS supply on the nominal"

Tsys. They said "breakeven curve has steepened in recent weeks to make room for

the new issue, and our experience suggests that the setup for TIPS is more or

less complete. As with nominals, the auction serves a valuable function in

aggregating liquidity and we'd expect the 5-year TIPS auction to do that to an

even greater extent." 

- But they are "less confident that a good reception on Thursday will lead to a

sustainable bounce in breakevens, but with five of the last six auctions coming

through 1 pm levels (and the sixth only tailing 0.1 bp), we're expecting a

decent result at this 5-year reopening as well. Real yields are at the upper end

of recent auctions likely adding to the real money bid and inflows are solid for

the product. Breakevens are also lower than they were at the last 2 auctions,

both of which were well received." 

- They cited Wednesday, "news of a potential hurricane in the Gulf of Mexico

among the factors helping energy markets rise" then; today crude oil weaker.