BMO's Aaron Kohli expects "fair......>

US TSYS/SUPPLY: BMO's Aaron Kohli expects "fair reception" at 1pm ET $20B 10Y

reopening with "stop close to the screws. While the note enjoys the considerable

tailwinds of a strong repo bid and a broader flattening trend in the curve, the

event risks this week (CPI and Fed), recent ETF outflows, the crowded schedule

and lack of an outright concession balance out those positives to some degree."

- He adds "we continue to advocate a flattening bias for the coming year, and

have been on about legging into flatteners should we see a sizable steepening.

We'd look to time the entry coming out of the Fed and the CPI print this week,

especially if weaker inflation leads to a steeper curve and a better entry."

- He said "we expect that the Fed will remain on the path to hike and tighten

next year and would look to play that view as an eventually inverted curve in

2s/10s (and 5s/30s as well)."

- Kohli noted "10s have not sold off much in outright terms with yields 3 bp

higher from the November auction", but late last wee, the "2s/10s curve steepen

7 bp pricing in a slight concession to the otherwise rich 10-year. Additionally,

10s are still relatively cheap" vs 30Y.