J.P.Morgan Expect 3-Year Supply To Be Smooth

J.P.Morgan note that Tuesday will see the Treasury auction "$58bn 3-Year notes, unchanged in size from last month. Since the April auction, 3-Year yields have declined by 3bp and are trading near the lower end of their three-month range. Nonetheless, the 3-Year sector appears modestly cheap along the curve after adjusting for the level of rates and the slope of the curve. The 3-Year roll opened at +2.375bp, in line with our fair value estimate, and is still trading at level, underperforming the erosion of carry. Overall, despite the modest decline in front-end yields, given current valuations, we think the 3-Year supply process should be relatively smooth."