BMO's Aaron Kohli adds on today's......>

US TSYS/TIPS: BMO's Aaron Kohli adds on today's 1pm ET US$14B 5Y TIPS reopening

that TIPS "liquidity" is "always a concern, and the presence of the auction will

likely provide one of the few opportunities to buy 5-year TIPS in size for any

real money investors. Given the backup in real yields in the belly on a more

hawkish Fed, we're likely to see that interest show up at the event."

- He adds non-TIPS "liquidity is "already a bit lighter as volumes fall heading

into the holidays", a "positive for the auction" as "it cld aggregate demand at

the event."

- He said Dec 5Y TIPS auctns offer "positive bias with 2 stops on the screws,

and two stops through in the last 6 yrs." 

- "We underweight the auction stats a bit in this case" due to "low frequency of

TIPS events, but it's a small positive," he said "Foreign demand has been steady

for the last 4 auctions with an uptick to 17% for the August event," a "positive

sign" though "we doubt" foreign buyers "are rushing to stock up on inflation

protection" amid "mediocre core-CPI readings. The demand may not persist but the

trend is positive nonetheless."