BMO's Kohli said on today's 1pm ET 7Y....>

US TSYS/7Y: BMO's Kohli said on today's 1pm ET 7Y auction that "although

headlines around possible Fed chairs and the impending nomination create

something of an event risk, we expect the 7-year to outperform the front end and

5s on any hawkish Fed news. That's primarily a function of how the different

parts of the curve react to the Fed with the 7-year and longer maturities

outperforming and 5s and shorter maturities selling off more when the Fed sounds

hawkish." 

- He adds that 7Y auction stats "lean slightly to a stop through with an average

of 0.7 bp through 1pm in the last six auctions. However, there is a slight

negative seasonal bias with three of the last eight October auctions tailing,

two stopping through and the rest on the screws." 

- He said "Fed buying is notably low at $700 million" in 7Ys "however, this is

due to tapering. 7s don't often go very special in repo and we're not convinced

that small SOMA holdings will make the 7-year any more special in repo for the

next issue."