BMO analyst Ian Lyngen said........>

US TSYS/RESEARCH: BMO analyst Ian Lyngen said Tuesday "saw a sharp bear

steepener unfold in the Treasury market and the details of the price action

offered some satisfaction for our in-range correction call. After pressing

toward 50 bp in 5s/30s earlier in the week, the curve moved back to 60 bp in a

rather dramatic fashion."

- He offered a "few cautionary observations on the price action, first of which

is that today was an archetype of year-end volatility and as such difficult to

follow with a great deal of conviction. Second, we're cognizant that building up

a volume base with the curve in the current range makes it more likely we'll get

a push flatter and potentially through 50 bp. Third, there was clearly something

else at play beyond simple tax reform optimism, as evidenced by the drop in

domestic equities. Fourth and final, supply once again became an issue following

the announcement that the German federal government will borrow more heavily in

the 30-year sector in 2018."