J.P.Morgan 7-Year Supply Will Require Above-Average End-User Demand

J.P.Morgan note that Thursday will see the "Treasury auction $47bn 7-year notes, $3bn larger than last month's auction and the largest auction on record. The July 7-year auction cleared at 0.446%, 0.5bp through pre-auction levels as end-user demand rose to 80.7%, the highest level since December 2019. More granularly, investment manager demand declined 3.1%-pts to 57.1%, while foreign takedown increased 2.5%-pts 12.9%. Since the July auction, 7-year yields have increased by 4bp and are now trading near the upper end of their 2-month range. The WI roll is trading at +0.625bp, roughly in line with our estimate of fair value. Despite the recent rise in yields, we think tomorrow's upsized auction will require above-average end-user demand to be digested easily."