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Cash Treasuries push lower, reacting.....>

US TSYS/3Y
US TSYS/3Y: Cash Treasuries push lower, reacting cross-market to pressure from
the recent block sale in Tsy 10Y futures (12,000 contracts at 10:54am ET, see
10:58am ET bullet). Tsys also pressured by dealer-led pre-auction shorts into
the $24B 3Y note auction, and by corporate rate-lock hedges.
- And BMO analyst Aaron Kohli said Treasury "will offer $24 bn in 3-year notes
which should be relatively well received by the market, though low volume stats
around summer vacations present the main risk of a tail. A late morning
concession should help the auction as well along with a seasonal bias to stop
through in August (five of the last seven times) and recently strong foreign
demand and flows. We wouldn't look to go long till after CPI on Friday, but
expect the auction will be well received."
- He said "foreign buying has remained mostly solid with the sponsorship at the
last auction at 25%, and the last month of inflows into foreign debt securities
by Japanese investors still showing strength. While 3s aren't historically the
favored point for Japanese buyers, it's a positive sign nonetheless." 

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