JPM: 20-Year Supply To Require Robust End-User Demand

J.P.Morgan note that "Treasury will auction $22bn reopened 20-year bonds on Tuesday, $5bn larger than the last reopening auction in July. The August new-issue auction cleared at 1.185%, 1.1bp cheap to pre-auction levels, as end-user demand declined 5.0%-pts to 73.8%. The details show foreign sponsorship rose to 12.4%, while the share of investment manager declined to 53.1%. Since the August auction, 20-year yields have risen by 1bp, and are modestly above averages that have persisted since the spring. Along the curve, the 20-year sector appears fairly valued after adjusting for the level of yields and the slope of the curve. Overall, with yields still near average levels and relative valuations fair, we think it will require robust end-user demand for this supply to be digested smoothly."