J.P.Morgan Suggest That 10-Year Supply Will Require Further Concession

Ahead of Wednesday’s 10-Year Tsy auction J.P.Morgan note that “10-Year yields have declined 55bp since the last auction and appear rich to their fundamental drivers. Furthermore, the 10-Year sector looks slightly rich on the wings after adjusting for rate levels and curve. Turning to positioning, our Treasury Client Survey shows that our clients are now the most net short since February 21, but the share of neutrals remains elevated at 72%. On net, given rich valuations and weak risk appetite, we think tomorrow’s auction is likely to require a further concession from current levels.”