Jefferies money market economist Tom...>

US TSYS/TIPS: Jefferies money market economist Tom Simons said "today's $11B

10-year TIPS reopening tailed 2 bps as it stopped at 0.450%. Normally one would

say that this is a poor result, but it is sterling compared to the 5.9 bps tail

generated by the July new issue."

- He added "the buyside re-emerged after an unenthused bid in July. Indirects

took down 70.4% of the auction, which is much closer to the record high set in

May than the meager 52.5% takedown in July." He said  "directs took down 2.3% of

the auction, which is their smallest takedown since September 2016" while "the

Dealer takedown came in at 27.3%, a few points above the recent average. The

2.32 bid/cover ratio is a big improvement over the 9-year low from July."

- Simons said the TIPS auction "has all the trappings of a "good tail" since the

WI has bounced a little bit in the early going and the Indirect takedown shows

some encouraging evidence of demand. Breakevens have narrowed about 6 bps since

pre-FOMC and we think they'll perform well from here, especially with the modest

cheapening since the auction."