BMO's Aaron Kohli said on 1pm ET $20B...>

US TSYS/10Y: BMO's Aaron Kohli said on 1pm ET $20B 10Y reopening that "10s have

been very rich in repo with the last week seeing reads of -2.30/-2.65% this

morning, roughly 340 bp through GC. That's partly an artefact of the Fed's

tapering which led them to own less of this issue ($2.8 bn) than they have in

the past, along with cash shorts. The Fed won't be buying anything in this

auction cycle, allowing some of the richness to linger (though the richest part

of the 10-year repo is often in the first month, before it is reopened)."

- He adds "so while we expect the issue will remain rich and provide an added

incentive for buyers, we're not expecting this level of richness to persist past

the first and second reopenings of the note."

- Kohli said 10Y auction "foreign allotment saw an uptick in November to 19.3%"

in a "continuation of a 3-month trend of increasing demand from international

buyers and fits well with the fact that the sector is a favorite for some non-US

investors and is a relatively safer spot on the curve as the Fed follows a

hawkish path. We're entering a period of seasonally weak Japanese flows and will

look to see if this shows up in the 10-year at the auction."