BMO Sees "Decent Demand" For 3s

BMO FICC sees "decent demand" at today's 3-Yr Tsy auction (1300ET), which will be a record-size $50bln: "The bullish drift in Treasuries to begin the shortened week limits the setup for this afternoon's 3-year auction – even if the bulk of any concessionary impulse will be a function of 10s and 30s tomorrow and Thursday. The last time a 3-year auction stopped more than 0.5 bp from WI levels was April; a reality made more noteworthy by the fact that we have seen a $10 bn increase to 3-year supply sizes since then."

"The backdrop of uber-easy monetary policy and a Fed ready to do more if needed will continue to benefit the front-end. Especially given the generally solid sponsorship we have seen at 3-year auctions recently, we won't look to fade that trend just yet. Despite the modest tail at last month's event, the continued resiliency of foreign buying is another reason to look for decent demand this afternoon. We'll need to wait for the more potentially market-moving supply events via 10s and 30s and anticipate 3s will come and go with little issue today."