JPM Believe 10s Will Require Some Concession For Supply To Go Smoothly

J.P.Morgan note that Wednesday will see the Treasury auction $38bn reopened 10-Year notes, "unchanged in size from the last reopening auction. Since the May auction, 10-Year yields have declined by 16bp and are trading at the bottom of their three-month range. Along the curve, the 10-Year sector appears fairly valued versus the wings after adjusting for the level of rates and the slope of the curve. Additionally, intermediate yields are below levels implied by fundamental drivers but are within the standard error of our fair value model. Nonetheless, with 10-Year yields at the bottom of their 3-month trading range, we think this supply will require some concession from current levels to underwrite smoothly."