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J.P.Morgan Believe 30s Require Concession Ahead Of Supply

US TSYS

J.P.Morgan note that Thursday will see the "Treasury auction $24bn 30-year bonds, unchanged in size from the last reopening auction in July. Since the August auction, 30-year yields initially declined as much as 17bp before partially retracing the move and are now trading 9p below the August auction stop. Moreover, the 10s/30s yield curve has flattened by 5bp over the period and now appears 13bp too flat relative to our fair value estimate, more than twice the standard error of the model. Overall, long-end valuations remain rich, and we think the auction will require some concession in order to be digested smoothly."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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