BMO's Aaron Kohli said 1pm ET $34B...>

US TSYS/SUPPLY: BMO's Aaron Kohli said 1pm ET $34B 5Y sale "shd be well

received" given price concession and 5s cheap on curve, "healthy" volumes after

Tues Yellen speech, "less event risk ahead" so "less reason to be pessimistic

about the outcome. We're inclined to let the Trump Tax cut trade run a bit

further and so aren't big buyers of 5s yet despite the concession and value on

the curve."

- He cited Fed Chr Yellen's "more balanced tone in the Q&A after the headlines

appeared to soften some of the pressure on the belly of the curve. The

concession we extracted along with the selloff this morning have added to the

value in the note."

- He adds 5s "cheap on a 3s5s7s fly in Tsy and swap space" and 2/5/7/10Y curve,

"more of a macro-driven theme with 5s/10s unusually flat as the Fed sounds

exceedingly hawkish in the face of soft inflation." Kohli said "next Fed chr

could well elicit stronger" mkt react esp. if "it's someone with a record of

being critical of too easy mon. pol. That wd put pressure on the 2-yr up to the

5-yr part of the curve and create a much better entry pt. "