BMO FICC: Stop Near The Screws For 20-Yr Auction

BMO FICC suggest, ahead of today's auction, that the 20-Yr Tsy appears to have a "solid baseline of demand" given good performance since May's launch. "On a very short-term time horizon despite the retracement from the outright local yield highs, on a 10s/20s/30s cash butterfly there is still a decent level of accommodation in current pricing. To say nothing of the value of the liquidity point in the still comparatively thinner liquidity security."

"However, if the result of last week's 30-year auction is any indication, we may need to see a more substantial intraday set up to inspire a truly strong result. This is at least partially a function of the larger-than-expected offering, so we'll look for a stop near the screws biased toward a small tail."