FTN's Jim Vogel cited "hot demand".....>

US TSYS/TIPS: FTN's Jim Vogel cited "hot demand" at today's $14B 5-year TIPS

reopening, "which was bid at 0.370% vs the WI bid of 0.406% at the deadline

about roughly 0.400% 30 mins prior to the sale."

- He cited "big" 71.7% indirects, "followed by directs at 12.2%. Dealer

allotment of 16.1% lowest on record, just below 16.7% at the initial sale last

April. Tender at high was 31.4%, low for a stop through that strong. Bid/cover

of 2.78x was also strong, comparable to 2009 when investors thought Fed QE was

going to cause inflation to soar."

- He adds that the "big swing toward TIPS clearly not that helpful for UST yield

curve that is getting itchier on the top of inflation in 2018-2019. A strong

auction would normally relieve pressure on cash 5s, at a minimum due to less

need to set hedges."